Manufacturing and mining production end 2016 on a decline
SA’s manufacturing sector, which accounts for an eighth of the economy, was not expected to do well last year, but still performed worse than expected
Output from SA’s manufacturing sector, which accounts for about an eighth of SA’s economy, ended the year with a decline.
Stats SA’s manufacturing output index, which was set to 100 in 2010, came in at 98.5 points in December, a 2% decline from the same month in 2015.
This was worse than economists’ expectations, which had not been rosy anyway: Trading Economics had forecast an increase of 0.1% while the Bloomberg consensus was for no change. Total manufacturing output for 2016, however, was 0.8% higher than in 2015.
South African factories sold R160bn worth of goods in December, according to Stats SA. Without taking inflation into account, this was a 5% increase on the R153bn sold in December 2015.
Total manufacturing sales for 2016 came to more than R2-trillion, a 6.5% increase on 2015’s R1.89-trillion.
Manufacturing output was down 1.1% in the December quarter. This decrease was mainly due to lower production in the food and beverages sector, which was down 6.2%; and in petroleum, chemical products, rubber and plastic products, which was down by 2.3%
Mining and manufacturing output are two major pointers for the economy’s growth prospects. The Reserve Bank’s most recent forecast put economic growth for 2016 at 0.4%. Mining output, released earlier on Thursday, decreased by 1.9% year on year in December, and was 2.7% down for the quarter.
Nedbank chief economist Dennis Dykes discusses weak mining and manufacturing data for December and whether a recovery lies ahead in 2017.