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Manufacturing production increased by 1.6% in August

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Data released by Statistics South Africa shows that manufacturing production increased by 1.6% in August compared to 2.2% in July.

The largest contribution to manufacturing production came from petroleum, chemical plastic, basic iron ore, steel and metal products among others.

Manufacturing production also increased slightly by 0.5% month-on-month in August.

Senior Economist at Econometrix Laura Campbell says, “The picture within the sector remains challenging with the only margin of counter point to this dynamic being the improvement in the competitiveness of South Africa’s export on global markets due to rand weakness and some degree of firmer domestic demand to support renewables or off grid energy projects. In the short-term, manufacturing will continue to be held back by domestic own goals such as load shedding and deteriorating infrastructure amid a slow global growth environment and in the longer term the industry faces ongoing structural headwinds.”

Meanwhile, data released by Statistics South Africa shows that mining production decreased by 2.5% in August.

The largest negative contributions came from diamonds, manganese ore, and metallic minerals.

On a month-on-month seasonally adjusted basis, mining production increased by 0.8%.

Mineral sales at current prices decreased by 16% year-on-year in August.

Independent Economist, Elise Kruger says, “Clearly indicative that in quarter three we will most probably see mining to be a negative contributor to growth. Having said that the mining sector is still clearly under severe pressure given the factors playing out from lower commodity prices linked to lower global demand as well as higher costs, everything from higher fuel to higher wages. The cost of mitigation of load shedding, all of that adding to a difficult business environment in the mining sector.”

 

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