Factory production drops in September, weighed down by wood and paper losses
Manufacturing production decreased 1.6% year on year in September 2017, data from Statistics SA showed on Thursday.
There was, however, a 1% rise in seasonally adjusted manufacturing production in the third quarter of 2017, when compared to the second, with six of the 10 manufacturing divisions reporting positive growth rates over this period.
The September purchasing managers index (PMI) suggested a slight improvement, but it remains below the neutral 50 mark, which indicates expansion versus contraction.
Mining and manufacturing make up 20% of GDP together.
Figures released earlier on Thursday showed that seasonally adjusted mining production increased 2% in the third quarter of 2017 compared with the second, while the monthly figure showed a drop of 0.9% year on year.
Investec economist Kamilla Kaplan said last week: “Despite the more favourable global backdrop, as the global economy experiences a synchronised upswing on higher levels of trade, industrial production and investment, growth in the local mining and manufacturing sectors has been constrained by weak domestic demand and depressed business.”
FNB economist Mamello Matikinca said the manufacturing sector remained weak and exports supported the quarter-on-quarter growth rate.
The largest drops in the September manufacturing figures came in the following sectors:
• Wood products, paper, publishing and printing (7% and contributing 0.9 of a percentage point);
• Petroleum, chemical products, rubber and plastic products (2.5% and contributing 0.6 of a percentage point)
• Motor vehicles, parts and accessories and other transport equipment (4% and contributing 0.3 of a percentage point).