South African manufacturing production growth climbed back into positive growth territory in November, rising 1.9% year-on-year, after contracting 2.7% year-on-year in October.
According to the BNP Paribas Securities economist Jeffrey Schultz, this also came in higher than the firm’s consensus of a 1.1% growth forecast.
Manufacturing Production On a seasonally adjusted month-on-month basis, manufacturing production climbed 0.3% in November, mainly on the back of a 2.4% increase in basic iron and steel and nonferrous metals, a 5.7% rise in motor vehicles, parts and accessories and a 0.7% climb in wood, paper, publishing and printing production.
The largest negative contribution came from a 2.1% drop in petroleum, chemical, rubber and plastics production.
In year-on-year terms, the improvement in headline growth was driven mainly by a return to positive production growth in food and beverages, which climbed 2.3% after contracting 6.6% the previous month.
Growth in the petroleum, chemicals, rubber and plastics sectors also improved, climbing 0.4% year-on-year from –1.8% in October, alongside a stronger , up 6.1% bounce in basic iron and steel and nonferrous metals.
The largest negative contribution came from motor vehicles, parts and accessories production, which slipped 3.2%, albeit at a slower pace of contraction following October’s double-digit drop.
“Though on the face of things the improvement in headline manufacturing production growth looks encouraging, momentum growth in the sector shows that activity remains extremely weak,” Schultz said.
He added that the Bureau for Economic Research’s newly released Manufacturing Purchasing Managers Index for December 2016 showed another deterioration in manufacturing activity in the final month of the year, down to 46.7 from 48.3.
“This does not bode particularly well for manufacturing’s ability to contribute positively to fourth-quarter gross domestic product growth,” Schultz noted.