Picture: THINKSTOCK
Picture: THINKSTOCK

The manufacturing sector took a knock in July, with production declining more than expected.

Manufacturing production shrank 1.4% from a year earlier.

The July purchasing managers index (PMI) suggested that the industry was doing poorly, with the index continuing to fall well below the neutral 50 mark.

FNB economist Mamello Matikinca expected manufacturing production to show another poor print as manufacturers continued to grapple with very weak domestic demand.

“Advance indications provided by the manufacturing PMI signalled a deterioration in levels of manufacturing activity in July, in a particularly weak domestic demand environment that has been insufficiently countered by the strengthening global demand,” she said.

Investec economist Kamilla Kaplan had expected manufacturing production to have declined at a rate of 0.5% year on year in July while Trading Economic projected a 0.9% fall from a year earlier.

The biggest drag came from petroleum, chemical products, rubber and plastic products, which detracted 1.8 percentage points.

Seasonally adjusted manufacturing production increased by 1.5% compared with June 2017 while seasonally adjusted manufacturing production increased by 0.9% in the three months ended July 2017 compared with the previous three months, with seven of the 10 manufacturing divisions reporting positive growth.

SA's economy exited recession in the second quarter, but there it little optimism of a significant improvement in the overall growth trajectory.

Mining production, released earlier on Thursday, was also worse than expected.

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