Advertise with

A stronger than expected rebound is thanks mainly to food and beverages, and metal products and machinery.
A stronger than expected rebound is thanks mainly to food and beverages, and metal products and machinery.

Manufacturing production off to a good start in final quarter

ECONOMIC NEWS - Dec 12th 2017, 14:44

Manufacturing production got the final quarter of a tough 2017 off to a good start, as expected, posting growth of 2.2% for October from a year earlier, after a revised 1.7% year-on-year contraction in September. 

Compared with September, manufacturing production was up 0.7%, Statistics SA said on Tuesday.

For the three months to October, output increased 0.8%, with only two of 10 subsectors showing positive growth in that period: petroleum, chemical products, rubber and plastic products, up 4.3%; and? basic iron and steel, nonferrous metal products, metal products and machinery, up 0.7%.

For the year to date, however, manufacturing production has contracted 0.9%.

The sector was one of the main contributors to the 2% growth rate the South African economy posted in the third quarter.

Manufacturing posted growth of 4.3% compared with the second quarter and contributed 0.5 percentage points to the gross domestic product (GDP) growth rate, Stats SA said last week.

"The manufacturing sector has derived some support from the strengthening global demand conditions but growth in the sector is being constrained by weak domestic demand and persistent policy uncertainty, which has weighed on confidence levels," Investec economist Kamilla Kaplan said in her weekly note released on Friday.

Purchasing managers indices (PMIs) have also consistently depicted a sector under pressure, and the November reading on Absa’s PMI, at 48.6 points, was a slight improvement but marked the sixth month in a row that it came in below the 50-point threshold between expansion and contraction.

SA’s economy is out of step with a global recovery, and growth for 2017 has been forecast at about 1% — far below the rate needed to create jobs and tackle a stubborn unemployment crisis.

Manufacturing is a potential job-creating engine for SA, which has one of the highest unemployment rates in the world, and industry body the Manufacturing Circle recently announced a plan to create a million factory jobs within the next 10 years.

Stats SA also released its quarterly employment statistics on Tuesday. The numbers — based on a survey of non-agricultural employers — showed that SA’s economy shed 31,000 jobs in the third quarter, with 5,000 of those coming from the manufacturing sector.

At end-September, the sector employed 1.176-million people.

© BusinessLIVE MMXVII 

Read more about: sa economy | production | pmi | manufacturing

Related News

SA economy at risk of third-quarter contraction
11/10/2019 - 09:54
Dismal mining and manufacturing figures for August have raised the prospect of a third-quarter economic contraction.

Rising feed costs clip Astral’s wings
11/10/2019 - 09:06
Astral Foods, SA’s largest poultry producer, said that rising feed costs and disappointing consumer spending patterns would crop its earnings in the year to end June.

SA's economy enters 70th month of downward cycle
09/10/2019 - 15:50
South Africa’s economy remains stuck in its longest downward cycle since 1945, adding to pressure on the government to implement reforms to lift business confidence and boost growth.

Business sentiment takes a turn for the better in September
09/10/2019 - 15:34
Business sentiment, as measured by the SA Chamber of Commerce and Industry (Sacci) business confidence index, took a positive turn in September.

Stats SA’s seasonal adjustment models are part of regular rebasing
08/10/2019 - 10:53
Every year, SA’s economic activity peaks in the fourth quarter (October-December). On the production (or industry) side of GDP, this pattern is driven mainly by three industries: manufacturing; trade, catering and accommodation; and transport, storage, and communication.