SOUTH African manufacturing output grew by a much lower than expected 0.8% year on year in June after an upwardly revised 4.4% (4.2%) year-on-year rise in May‚ data released by Statistics South Africa on Wednesday showed.
Factory output has been hit hard by the recession in Europe and a slowdown in the US and China, taking a heavy toll on demand for locally manufactured exports.
Domestic demand for manufactured goods is also on the back foot as business confidence wanes and growth in consumers’ disposable incomes slows in response to lower wage settlements.
The 0.8% year-on-year increase in manufacturing production was mainly due to higher production in the petroleum‚ chemical products‚ rubber and plastic products sector‚ with a 4.3% rise and a 1.1 percentage point contribution; the food and beverages division‚ with a 2.6% increase and a 0.4 percentage point contribution; and the wood and wood products‚ paper‚ publishing and printing division‚ with 2.4% and a 0.2 percentage point contribution.
Seasonally adjusted manufacturing production decreased by 0.2% in the second quarter of this year compared with the first quarter.
Five of the 10 manufacturing divisions reported negative growth rates over this period.
The decrease was driven mainly by lower production recorded for the basic iron and steel, nonferrous metal products, metal products and machinery division (down 6.2% and contributing -1.3 percentage points); the wood and wood products, paper, publishing and printing division (falling 4.8% and contributing -0.5 percentage points); and the glass and nonmetallic mineral products division (down 1.2% and contributing -0.1 percentage points).
The purchasing managers’ index (PMI), a reliable health gauge for the manufacturing sector, improved last month, data showed on Monday.
Against market expectations for a decline, the PMI rose 2.8 points to 51 last month from 48.2 in June.