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SA factory output contracted for the second consecutive month in July as the output of petroleum and chemical products and basic iron and steel continued to shrink.
Manufacturing production declined 1.1% from a year earlier, compared with a revised 3.6% fall in June, Statistics South Africa said Tuesday in a report on its website. The median estimate of nine economists in a Bloomberg survey was for a 1.5% contraction. Output increased 0.4% in the month.
Key Insights:
- The drop in output is a bad third-quarter start for an economy that managed to dodge a second recession in consecutive years after it expanded an annualised 3.1% in the three months through June.
- Manufacturing accounts for about 14% of gross domestic product and output is very sensitive to power-supply constraints. While Eskom hasn’t implemented load shedding since the first quarter, a member of the utility’s board, Nelisiwe Magubane, has warned that an uptick in economic growth could lead to a new round of power cuts as the power utility won’t be able to respond to an increase in demand for electricity.
- With assistance from Simbarashe Gumbo and Renee Bonorchis.
