Benefit of lower production prices overshadowed by political and demand issues
Production prices surprised in June, which means lower input costs for the manufacturing sector; however, revitalising the sector may be a pipe dream owing to ongoing political and policy uncertainty and weak domestic demand. According to Statistics SA, the production price index (PPI) dropped significantly to 4.0% in June from 4.8% May. While this signals lower input costs for the sector, manufacturing has taken a knock in recent months. In May, manufacturing production fell 0.8% compared with May 2016. The Absa purchasing managers index (PMI) dipped below the neutral 50-mark in June to 46.7 index points indicating a contraction in the sector in the coming months. The Manufacturing Circle has a strategy to reverse the decline of the sector: the Map-to-a-Million initiative, which aims to create a million jobs by strengthening and growing the manufacturing sector. The body’s current initiatives include the Vaal Triangle Rejuvenation Project, and better training for middle management ...
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