An increase in food and beverage production has helped the manufacturing sector escape a decline in June.
Stats SA data shows manufacturing production increased by 0.7% year-on-year in June, way below market expectations. It was at 2.3% year-on-year in May.
Some economists expected a 2.2% growth in June.
“The largest positive contribution towards an increase in manufacturing production came from the food, beverages and petroleum sectors. The largest negative contributions were from motor vehicles, parts and accessories as well as wood products. The manufacturing sector is being negatively impacted by the volatile rand and global trade tensions. It is also battling low demand as well as high input costs, on the back of higher fuel and electricity prices. The July Purchasing Managers Index, however, points to moderate improvement in the sector in the third quarter. The index rose to 51.5 index points in July from 47.9 in June. This indicates expansion in the manufacturing sector,” says Nocolai Classeen from Statistics SA.
All other divisions experienced fall in production, the largest decline was recorded by communications and professional equipment falling by 9.8%, wood and paper continued its bad run recording its 18 month of consecutive decline.
The manufacturing sector is the fourth largest contributor to economic growth in South Africa.
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