Production in the manufacturing sector rose the most in almost three years as the worst load-shedding the country has seen abated.

Manufacturing production grew 4.6% in April, after the sector saw growth of 1.3% in March. This was higher than the Bloomberg consensus which projected growth of 1.3%.

While a boost in the manufacturing sector bodes well for GDP, the retail sales and mining production figures expected on Wednesday and Thursday will provide a clearer picture of how the economy performed at the start of the second quarter, and whether SA has managed to avoid a recession.

SA’s shock 3.2% first-quarter contraction, the worst performance in a decade, was driven by a 13.2% contraction in agriculture, a 10.8% mining contraction and an 8.8% contraction in manufacturing, the latter two hit by load-shedding.

“The manufacturing data provides a bit of evidence that the economy avoided a second consecutive quarter of contraction, which would knock the economy into another technical recession,” Capital Economics economist John Ashbourne said.

The biggest growth drivers in the manufacturing sector were a 9.4% rise in basic iron and steel, nonferrous metal products, metal products and machinery; an 18.6% jump in motor vehicles, parts and accessories, and other transport equipment; a 3.3% rise in food and beverages; and a 1.7% increase in petroleum, chemical products, rubber and plastic products.


Production also increased by 2.8% in April compared to March.

This is a strong start to the second quarter for the sector after the re-emergence of load-shedding in the first quarter, which weighed on production volumes, keeping growth in the sector constrained.

“If Eskom manages to keep the lights on or to at least limits future load-shedding to stage 1, manufacturing output should improve further off a low base over next three quarters,” Nedbank senior economist Nicky Weimer said.

However, that would be contained by softer demand and relatively stagnant commodity prices, she said.

Statistics SA’s manufacturing production index, which was at 100 points in 2015, came in at 103.9 in April, up from 101.1 points in March.

Manufacturing Circle executive director Philippa Rodseth talks to Business Day TV about the latest manufacturing production data

The monthly changes in factory output measured by Statistics SA usually tend to be foreshadowed by the Absa purchasing managers’ index (PMI), which is published on the first business day of each month.

The PMI, which gauges activity in the manufacturing industry, rose by 2.2 points to reach 47.2 index points in April — the first increase in three months.

The survey suggests that conditions may have softened again in May when the PMI dropped to 45.4.

CORRECTION: June 11 2019
The story has been updated to reflect that the three-year high refers to the rate of change, rather than the level of the manufacturing index.