Fac­tory out­put rises in Novem­ber

Business Day - - FRONT PAGE - Su­nita Menon [email protected]­nesslive.co.za

Pro­duc­tion from SA’s fac­to­ries con­tin­ued to im­prove in the last quar­ter of 2018, data from Statis­tics SA showed on Thurs­day. An­nual growth in man­u­fac­tur­ing pro­duc­tion grew 1.6% in Novem­ber after a higher-than-ex­pected boost of 3% in Sep­tem­ber.

Pro­duc­tion from SA’s fac­to­ries con­tin­ued to im­prove in the last quar­ter of 2018, data from Statis­tics SA (Stats SA) showed on Thurs­day.

An­nual growth in man­u­fac­tur­ing pro­duc­tion grew 1.6% in Novem­ber, in line with a Bloomberg con­sen­sus, after a higher-than-ex­pected boost of 3% in Sep­tem­ber.

The big­gest growth driv­ers were a 5.2% rise in food and bev­er­ages, and a 6.2% uptick in mo­tor ve­hi­cles, parts and ac­ces­sories and other trans­port equip­ment. How­ever, the ba­sic iron and steel, non­fer­rous metal prod­ucts, metal prod­ucts and ma­chin­ery divi­sion fell 1.7%.

Com­pared with Oc­to­ber, man­u­fac­tur­ing pro­duc­tion grew 0.7% in Novem­ber.

Stats SA’s man­u­fac­tur­ing pro­duc­tion in­dex, which was at 100 points in 2015, rose to 115.8 points in Novem­ber 2018, up from 113.2 in Oc­to­ber and 114 in Novem­ber 2017.

The monthly changes in fac­tory out­put mea­sured by Stats SA usu­ally tend to be fore­shad­owed by the Absa-spon­sored pur­chas­ing man­agers’ in­dex (PMI), which is usu­ally pub­lished on the first busi­ness day of each month.

In Novem­ber, the man­u­fac­tur­ing PMI saw its first in­crease after three straight months of de­clines, ris­ing to 49.5 in­dex points — the best level since July 2018. A level be­low 50 points in­di­cates a con­trac­tion in the sec­tor. In re­cent months the pro­duc­tion fig­ures and the sur­vey have not been in tan­dem.

In fact, the strong re­cov­ery in the third quar­ter and the con­tin­ued mo­men­tum in the fourth quar­ter are de­spite an av­er­age PMI print of only 47.5 in the last three months of 2018.

The sec­tor is ex­pected to fare bet­ter in 2019, Ned­bank se­nior econ­o­mist Nicky Weimar said.

“Ex­port-ori­en­tated in­dus­tries should ben­e­fit from a mod­estly grow­ing world econ­omy and stead­ier com­mod­ity prices, while those in­dus­tries re­ly­ing on do­mes­tic de­mand should also fare slightly bet­ter,” he said.

How­ever, the sec­tor still faces head­winds, In­vestec econ­o­mist Lara Hodes warned. Lo­cal de­mand re­mains some­what sub­dued, while op­er­a­tional con­straints and in­put cost pres­sures dampen ac­tiv­ity.

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