SA’s economic growth forecast cut to 0.7%
DATA released by Statistics South Africa (StatsSA) yesterday showed that manufacturing production in South Africa increased 1.5 percent year-onyear in August – its strongest expansion in 11 months… boosted by higher production of basic iron and steel, non-ferrous metal products, metal products and machinery.
The up-tick was also better than the market expectations of a 0.05 percent drop, recording the first expansion in factory activity after four consecutive months of declines.
FNB senior economist Jason Muscat, however, warned that the improvement was driven off a low base and that there was not much to celebrate.
Muscat said the sector was still expected to register a third consecutive negative gross domestic product (GDP) print in the third quarter.
“The biggest contributor to the improvement was an 11.3 percent improvement in basic iron and steel, metal and machinery output, which contributed a full 2 percentage points,” Muscat added.
“Food and beverage production, which account for a quarter of manufactured output, was flat on on a seasonally adjusted basis.
“This is the measure used to estimate the sector’s contribution to GDP and it increased by 1.3 percent quarter-on-quarter in the three months to August, versus an increase of 0.8 percent on a quarterly basis in the second quarter in a yearon-year basis and on the back of weak domestic demand.”
On a monthly basis, StatsSA said manufacturing production inched up 0.3 percent in August, compared to a 1.5 percent rise in July. Last week, the Absa Purchasing Manager’s Index (PMI), compiled by the Bureau of Economic Research (BER), nudged slightly higher to a still weak level of 44.9 points in September from 44 points in the previous month.
The Absa/BER index has been well below its neutral level of 50 points for four consecutive months.
Kamilla Kaplan, an economist at Investec, said while manufacturing production increased in August, the improvement was not broadbased across the industries.
“Nevertheless, over the past year the performance of the SA manufacturing sector has diverged from global manufacturing production, which has strengthened,” Kaplan said. “The global PMI and export orders have consistently remained in expansionary THE INTERNATIONAL Monetary Fund (IMF) has cut South Africa’s economic growth forecast for this year from the previous 1 percent to 0.7 percent and singled out “rising political uncertainty” for the cut. In its latest World Economic Outlook,
territory since mid-2016, suggesting improving momentum in both global production and trade.”The macroeconomics statistics website, Trading Economics, said industrial production in South Africa averaged the IMF said the political uncertainty dented consumer and business confidence in the country. The IMF said South Africa’s gross domestic product (GDP) growth was expected to remain subdued, despite more favourable commodity export prices and strong agricultural production, as heightened
0.95 percent from 1974 until 2017, reaching an all-time high of 18.50 percent in May 1995 and a record low of -23.20 percent in April 2009.
The manufacturing sector has had to endure a strenuous political uncertainty saps consumer and business confidence. The IMF expected a 1.1 percent growth for South Africa next year. In February, the National Treasury predicted that the economy would grow by 1.3 percent this year and 2 percent in next year. That was before SA’s downgrading
period in recent months.
StatsSA said in its Quarterly Employment Statistics survey second-quarter losses were mostly in the manufacturing, construction and community services sectors. to sub-investment grade. Finance Minister Malusi Gigaba is expected to reveal the latest estimates when he delivers his inaugural his Medium-Term Budget Policy Statement on October 25. The IMF said economic growth in sub-Saharan Africa would soar by 2.6 percent this year.
The highest job losses were in the manufacturing industry, which shed 13 000 employees, while job losses in the construction industry totalled 11 000, followed by community and social services shedding 10 000 jobs.