https://www.engineeringnews.co.za

South African economy ‘too weak’ to support manufacturing sector – Seifsa

4th July 2017

By: Anine Kilian

Contributing Editor Online

     

Font size: - +

The decline in the Absa Purchasing Managers’ Index (PMI) for June is confirmation that the fundamentals of the South African economy are too weak to support the manufacturing sector, the Steel and Engineering Industries Federation of Southern Africa (Seifsa) said on Tuesday.

The PMI dropped to 46.7 index points in June, down from 51.5 in May.

Overall, at the present level, the index is indicative of contraction in the manufacturing sector.

“Following the sharp decline of the index in April to 44.7 index points, on the back of the unfortunate political events and the downgrades, we had welcomed the rebound in the May reading to 51.5 index points as a normalisation of the trend,” Seifsa senior economist Tafadzwa Chibanguza said.

He added that, in addition to the weak economy, the manufacturing sector had, however, experienced a gradual and painfully slow erosion of confidence and production capacity.
 
Chibanguza noted that business activity, new sales orders, employment, inventories and purchasing commitments decreased to below 50 index points.

This was indicative of deterioration in an already negative environment, he said.
 
“At a deeper glance, this weakness is a function of a weak economy,” Chibanguza pointed out.

He added that the weak economy was also evident in Seifsa’s first quarter review of the metals and engineering sector, where sub-industries with lower export-to-output ratios and more reliance on the domestic economy for orders, performed the worst and contracted in all instances.
 
“Unfortunately, the stronger rand in June would not have contributed any upside to export prospects. Manufacturers would have faced headwinds both at home from a slowing economy, which is in a technical recession, and outside of its borders because of a stronger rand,” Chibanguza said.
 

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

SMS group
SMS group

At SMS group, we have made it our mission to create a carbon-neutral and sustainable metals industry.

VISIT SHOWROOM 
Actom image
Actom

Your one-stop global energy-solution partner

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.078 0.124s - 157pq - 2rq
Subscribe Now