Analysts are optimistic that the manufacturing sector is likely to contribute positively to the Gross Domestic Product (GDP) in the second quarter of this year.
Manufacturing output ticked up reflecting a rebound from five consecutive months of annual decline.
Output in the sector increased by 3.4% in April 2023 compared to April 2022. This follows a downward revised contraction of 1.8 %in March.
Senior economist at FNB, Thanda Sithole says, “The April outcome that we are talking about now would be counted in the second quarter and I think it is positive although marginally. Particularly the 0. 5% month-on-month on a seasonally adjusted basis. That is positive and I think if manufacturing output continues to surprise to the upside over the remaining months of the second quarter. We could see the overall manufacturing sector continuing positively to GDP.”
Seasonally adjusted manufacturing production also increased by 0.5% month-on-month and seasonally adjusted manufacturing production increased by 1.2% in the three months, despite these positive gains.
Sithole says there are still other issues that the sector is grappling with.
“Domestic demand is weakening and the external environment is also not supportive if you look at manufacturing capacity utilisation at the end of March it fell relative to the end of December and that reflected insufficient domestic demand.”
VIDEO: Manufacturing output shows uptick: