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Manufacturing sector expected to contract - analyst

May 11 2017 14:06
Lameez Omarjee

Johannesburg – Manufacturing production for March eked out growth of 0.3% for the year.

This is according to sales and production data released by Statistics South Africa on Thursday.

The data shows a 0.6% drop since February.

The main contributor to the increased production was 6% growth in iron, steel, non-ferrous metal products, metal products and machinery.

Other contributors to production growth include glass and non-metallic mineral products by 10.5%, and motor vehicles, parts and accessories and other transport equipment by 5.8%. Collectively these products contributed almost 2% growth, explained FNB economist Jason Muscat.

However petroleum, chemical products, rubber and plastic products dragged down the sector’s production levels. These products were down 5.3% in March.

Other negative contributors include wood and wood products, paper, publishing and printing down 2% and electrical machinery 10.2% lower. Food and beverage production came down 0.3%.

Muscat explained that exported products seem to have performed better than goods produced for domestic demand. “[It] reflects the divergence between an improving global outlook against a subdued local backdrop,” he said.

FNB expects the sector’s GDP to decline 4% for the quarter. This will take off 1% of total GDP.

READ: SA possibly in technical recession – analyst

Previously, given February’s data, Muscat suggested the country may be heading for a technical recession if there was no turnaround in March. 


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