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Strikes hit factory output

Nov 08 2012 14:01 Reuters

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Johannesburg - Manufacturing output tumbled to its worst level in six months in September, mainly because of strikes which started in the mining sector, surprising economists who had not expected such a big fall.

Output contracted 1.1% year-on-year in September, while August manufacturing was revised 0.2 percentage points lower to a 2.8% expansion, Statistics South Africa said on Thursday.

Economists polled by Reuters had expected output to fall 0.5% in September.

"The industrial strikes have begun to take their toll on domestic figures," said Anisha Arora, emerging markets analyst at 4Cast.

"Strike action rapidly spread from mining to manufacturing and even the services sector well into October, closing plants and operations for weeks and resulting in vast losses of production volumes."

Manufacturing contributes about 15% of gross domestic product and is a major employer in a country where over 25% of the labour force is without jobs.

Official statistics last week showed 197 000 more people had lost jobs in the third quarter of this year.

On a month-on-month basis Statistics South Africa said production fell by a seasonally adjusted 2.3% but grew slightly by 0.3% in the three months to September compared with the previous quarter.

The Kagiso PMI, a key manufacturing indicator ahead of official statistics, has contracted since September and fell to its lowest level in over a year in October, pointing to a bleak outlook for the sector.
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