Johannesburg - Growth in South Africa’s manufacturing output quickened slightly to 0.6% year-on-year (y/y) in volume terms in May compared with a downwardly revised 0.2% in April, Statistics South Africa said on Tuesday.
A Reuters poll showed economists expected manufacturing output to increase to 2.4% y/y in May. Compared with April, production in volume terms rose by a seasonally adjusted 0.4% in May and was at 0.5% in the three months to May, compared with the previous three months.
Peter Attard Montalto, emerging market economist at Nomura, said the figure was lower than expected.
“Manufacturing surprises market (but not us) to downside. A combination of external slowdown from Asia, loss of sentiment from eurozone issues, weak labour hiring, corporate de-leveraging and lack of private sector investment to drive growth all playing a part here," he said.
The number should ensure the South African Reserve Bank remains dovish through to the third quarter, he said.
South Africa’s factory production contributes about 16% to gross domestic product (GDP), but recovery has been tentative after a contraction in 2009 that pushed the country to its first recession in nearly two decades.
Recovery in the sector gained momentum in the first quarter of this year and grew by 14.5%, boosting GDP.
The central bank said at its May meeting the sector was still underperforming and production levels had not yet reached pre-recession levels.
The purchasing managers’ index (PMI) - a key indicator of industrial activity ahead of official data - fell to 53.9 in June from 55.1 in May, weakening for the third consecutive month.
A Reuters poll showed economists expected manufacturing output to increase to 2.4% y/y in May. Compared with April, production in volume terms rose by a seasonally adjusted 0.4% in May and was at 0.5% in the three months to May, compared with the previous three months.
Peter Attard Montalto, emerging market economist at Nomura, said the figure was lower than expected.
“Manufacturing surprises market (but not us) to downside. A combination of external slowdown from Asia, loss of sentiment from eurozone issues, weak labour hiring, corporate de-leveraging and lack of private sector investment to drive growth all playing a part here," he said.
The number should ensure the South African Reserve Bank remains dovish through to the third quarter, he said.
South Africa’s factory production contributes about 16% to gross domestic product (GDP), but recovery has been tentative after a contraction in 2009 that pushed the country to its first recession in nearly two decades.
Recovery in the sector gained momentum in the first quarter of this year and grew by 14.5%, boosting GDP.
The central bank said at its May meeting the sector was still underperforming and production levels had not yet reached pre-recession levels.
The purchasing managers’ index (PMI) - a key indicator of industrial activity ahead of official data - fell to 53.9 in June from 55.1 in May, weakening for the third consecutive month.