Picture: MASI LOSI
Picture: MASI LOSI

Manufacturing production recorded its second consecutive contraction in July, in line with analysts’ expectations.

Manufacturing production decreased 1.1% in July, after the sector fell by 3.2% in June. This was slightly less than the Bloomberg consensus for a contraction of 1.5%.

The sector has been burdened by weak consumer demand and softening export growth prospects as a result of the strained global trade situation, mostly between the US and China.

The biggest drags were an 8% fall in petroleum, chemical products, rubber and plastic products; a 4.4% drop in basic iron and steel, non-ferrous metal products, metal products and machinery' and a 5.1% decrease in wood and wood products, paper, publishing and printing.

Compared to the prior month, however, seasonally adjusted manufacturing production increased by 0.4% in July.

Statistics SA’s manufacturing production index, which was at 100 points in 2015, came in at 102 points in July, up from 99.1 points in June.

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.

The PMI, which gauges activity in the manufacturing industry, rose to 52.1 points in July, indicating expansion in the manufacturing sector for the first time this year. This was the index’s highest level in more than three years.

menons@businesslive.co.za