Photo by: Duane Daws
Manufacturing output for November fell below analyst expectations, registering a “disappointing” 1.3% year-on-year contraction.
This followed on the revised 2.3% year-on-year uptick in October.
Statistics South Africa, which released the production and sales findings for the month on Monday, attributed the weakened November output to the lower production of motor vehicles, parts and accessories and other transport equipment; food and beverages; and glass and nonmetallic mineral products.
The motor vehicles, parts and accessories and other transport equipment sector recorded a 9.1% contraction, contributing -0.9 of a percentage point, while the food and beverages sector contributed -0.4 percentage points after reporting a decline of 1.7% in output. Production in the glass and nonmetallic mineral products sector decreased 6.8% and contributed -0.3 of a percentage point.
Production for the month under review was well below market expectations of between the 0.9% ambitions tabled by BNP Paribas Cadiz economist Jeffrey Schultz and the 1.7% expected by Nedbank’s Economic Unit.
On a seasonally adjusted basis, manufacturing production increased 4.1% during the three months to November, with all ten manufacturing divisions recording positive growth rates.
The main contributors to the increase were the motor vehicles, parts and accessories and other transport equipment division, with a 16.7% hike and contributing 1.4 percentage points, and the basic iron and steel, nonferrous metal products, metal products and machinery division, which delivered a 5.5% increase and contributed 1.1 percentage points.
The Nedbank Economic Unit commented in a flash comment to clients that the outlook for 2015 remained subdued, given the ongoing power outages, the threat of renewed labour disruptions, expectations of slower growth in key export markets, particularly Europe and China, and sharply lower international commodity prices.
“November’s disappointing manufacturing production numbers highlight an industry [that] remains on shaky ground thanks largely to weak global and domestic demand conditions. Electricity supply problems are also keeping us cautious on the outlook for this side of the economy with the Purchasing Managers’ Index [manufacturing statistics] out later this week likely to reflect these concerns,” said Schultz.
However, despite this, Schultz pointed out that the strong growth momentum – at 17.7% on a seasonally adjusted and annualised basis – suggested a “more robust contribution” from the manufacturing sector to the fourth-quarter 2014 gross domestic product.