Shock fall in factory output delivers second blow to growth outlook
The unexpected contraction follows a much steeper than expected decline in mining production
Manufacturing output declined 1.3% in March — a second blow to SA’s first-quarter gross domestic product (GDP) prospects following a shock 8.4% decline in mining output reported earlier on Thursday.
Statistics SA reported manufacturing output declined 1.7% during the first quarter while mining output declined 2.5% during the first quarter.
The figure confounded the economists’ consensus that annual manufacturing output growth would accelerate to about 1% in March from February’s 0.5%.
The February figure was revised down by Stats SA from the originally reported 0.6%.
The drop in manufacturing output was foreshadowed by the Absa purchasing managers index (PMI), which fell to 46.9 in March from 50.8 in February, its lowest reading since December.
FNB economist Mamello Matikinca said last week: “The big slump in the Absa PMI number in March raises the possibility of a disappointing number next week. Overall, however, as domestic household consumption begins to gain momentum, we expect the manufacturing numbers to begin showing a modest improvement through the year."
Petroleum, chemical products, rubber and plastic production fell down 6.3%, contributing a 1.5 percentage point drop to the total.
Wood and wood products, paper, publishing and printing production fell 6.1%, contributing a 0.7 of a percentage point decline.