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SA’s manufacturing output grew 2.3% in May from the same month in 2017, contradicting a drop predicted by the Absa purchasing managers index (PMI).
SA’s manufacturing output grew 2.3% in May from the same month in 2017, contradicting a drop predicted by the Absa purchasing managers index (PMI).

SA factories do better than expected in May

ECONOMIC NEWS

By Sunita Menon - Jul 12th 2018, 13:47

SA’s manufacturing output grew 2.3% in May from the same month in 2017, contradicting a drop predicted by the Absa purchasing managers index (PMI). 

But the chances of manufacturing not contributing to a decline to the second-quarter GDP figure is not good considering the three-month seasonally adjusted figure reported by Statistics SA was negative 1.5%.

Total sales by South African factories came to R192bn in May, up from R165bn in April and R180bn in May 2017.

Stats SA’s manufacturing production index, which was set to 100 in 2015, rose to 102.8 points in May from 92 points in April and 100.5 points in May 2017.

May’s growth in manufacturing output was driven by food and beverages, which rose 5.5%. The next best performing sector was petroleum, chemical products, rubber and plastic products, which grew 3.3%.

Stats SA’s monthly manufacturing report is foreshadowed by Absa’s PMI, which fell from 50.9 in April to 49.8 in May, indicating a contraction in the sector.

"Advance indications provided by May’s PMI reading alluded to a slowdown in demand, as reflected in lower new sales orders, which subsequently supported a decline in business activity," said Investec economist Lara Hodes, who expected a contraction of 1.4%.

FNB economist Mamello Matikinca said: "Domestic demand remains relatively subdued and growing fears of a trade war, coupled with concerns about a slowing global economy, is likely to have hampered output."

 

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