SA’s manufacturing production in February surprises on the upside
MANUFACTURING production increased by a higher than expected 4.1% in February compared with the same month a year before. Statistics SA data showed the biggest positive contributions came from wood and wood products, paper, publishing and printing, as well as petroleum, chemical products, rubber and plastic products.
Seasonally adjusted manufacturing production, however, decreased 0.3% in February compared with January 2024. This followed month-on-month changes of 0.4% in January 2024 and -0.6% in December 2023.
FNB senior economist Thanda Sithole said this decline was disappointing, particularly given the subdued quarterly gross domestic product (GDP) growth regime. She said a mild decline in March would cause the manufacturing sector to drag quarterly GDP growth in the first quarter, and the manufacturing PMI reading for March was not encouraging in this context.
Investec economist Lara Hodes said the 4.1% manufacturing production growth outcome was above a Bloomberg consensus of a 3.7% year-on-year lift. Sithole said in spite of the persistent challenges, the manufacturing sector had shown “remarkable resilience”. It expanded by 0.5% in 2023, marking a modest rebound from the 0.3% decline in 2022.
“The year-to-date expansion underpins our view average annual growth in manufacturing output will be sustained this year.
“This is echoed by the manufacturing PMI expected business conditions index, which rose to 62.1 points in March, indicating manufacturers expect operating conditions to improve in the near term. Nevertheless, “the pace of growth should be consistent with weak domestic and external demand, as well as ongoing structural constraints”, said Sithole.
Seasonally adjusted manufacturing production was flat in the three months ended February 2024 compared with the previous three months, Statistics SA said.
The largest negative contribution was made by the motor vehicles, parts and accessories and other transport equipment division (-11.9%) and the largest positive contribution was made by the food and beverages division (3.6%).
Seasonally adjusted manufacturing sales increased by 1% in February 2024 compared with January 2024. This followed month-on-month changes of -1.2% in January 2024 and 1.7% in December 2023.
Seasonally adjusted manufacturing sales increased by 2.2% in the three months ended February 2024, compared with the previous three months.
The largest positive contributions were made by food and beverages (4%), basic iron and steel, non-ferrous metal products, metal products and machinery (2.5%) and petroleum, chemical products, rubber and plastic products (1.9%).
Hodes said global manufacturing conditions had strengthened. The results of the latest JP Morgan Global Manufacturing survey showed “manufacturing output increased for the third successive month in March, with the rate of growth accelerating to a 21-month high”.
She said February’s positive manufacturing output results were supported by the seasonally adjusted headline Purchasing Managers’ Index reading, which moved into expansionary territory in February with a reading of 51.7 points.