A rebound for the manufacturing sector may be on the cards after surprise growth in August.

After four successive months of contraction, manufacturing increased 1.5% year on year in August.

Despite the welcome improvement, the Manufacturing Circle remained concerned about the inconsistent performance, with executive director, Philippa Rodseth saying it had been “too erratic” to give any indication of sustained positive performance.

“To achieve consistently positive results, we need to focus on achieving a competitive manufacturing environment, attain[ing] a supportive international trade position and advancing the reputation of South African manufactured products,” Rodseth said.

The Manufacturing Circle wanted to see growth across
all manufacturing subsectors on a consistent basis — and not erratic performance on a month-on-month and quarter-on-quarter basis, she said.

It was too early to tell whether or not the marked improvement would be sustained, said Rodseth.

“The PMI [Absa Purchasing Managers Index] is a leading indicator which suggests that consistent and sustained growth is not anticipated in the short term,” he said.

In September, the PMI rose to 44.9 points, from 44, but remained below the neutral 50 level. This indicated the manufacturing sector was contracting rather than expanding.

First National Bank senior economic analyst Jason Muscat said: “We are reluctant to read too much into the improvement as much of it was driven off a low base, and we continue to expect the sector to register its third consecutive negative GDP print for the third quarter.”

Nascence economist Xhanti Payi said: “Things are volatile because of the exchange rate. We did well in August because of the stable exchange rate, but the rand is weaker. A level of stability is an impetus.”

The green shoots of growth may also be hampered by low confidence, he said.


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