Minuscule manufacturing growth in December, but outlook is more rosy
Manufacturing production grew just 0.1% in December but saw a 1.2% boost in the fourth quarter and for 2018 as a whole
While manufacturing was subdued in December, the sector will give growth a slight boost in 2018, data from Statistics SA showed on Thursday.
Annual growth in manufacturing production grew 0.1% in December, far lower than the Bloomberg consensus of 1.4%, after boost of 1.6% in November.
The biggest growth drivers were a 3.8% rise in food and beverages; a 7% uptick in motor vehicles, parts and accessories and other transport equipment; and a 9.7% increase in glass and nonmetallic mineral products.
Seasonally adjusted manufacturing production increased 1.2% in the fourth quarter of 2018 compared with the third quarter, while the sector grew 1.2% for the year as a whole.
Statistics SA’s manufacturing production index, which was at 100 points in 2015, came to 103.9 points in December 2018, down from 115.8 points in November. The index has not reached this level since September 2008.
The monthly changes in factory output measured by Statistics SA usually tend to be foreshadowed by the Absa-sponsored purchasing managers index (PMI), which is published on the first business day of each month.
Activity in the manufacturing sector reached its best level in December 2018, ending the year on a strong note.
The PMI rose from 49.5 in November to 50.7 points in December. This is the first time since May 2017 that the index has breached the neutral 50 mark. However, in recent months, the PMI and production figures have not been in tandem.
Earlier in the day, Statistics SA reported that manufacturing had added 48,000 jobs in the fourth quarter of 2018.
The Manufacturing Circle, which represents companies in the sector, voiced concern over weak local demand, which has been compounded by high input costs.
“We would like to see consistent positive performance by the manufacturing sector on a long term basis, and this is currently not the case as we see volatility in the statistics,” Manufacturing Circle executive director Philippa Rodseth said.
“We are confident that the sector continues to play a fundamental role in the economy, although there are structural challenges that need to be addressed. Competitively priced reliable energy supply is currently high priority,” she said.