Factory output rises in November
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.