ECONOMIC WEEK AHEAD: Mining and factory data in spotlight
Economists expect manufacturing production to continue to improve
06 October 2024 - 15:22
by Denene Erasmus
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The main local economic releases this week will be manufacturing and mining production for August, which will be published by Stats SA on Thursday.
Economic activity in the manufacturing sector was off to a good start at the beginning of the third quarter with output for July improving above expectations.
According to Stats SA’s July data, manufacturing production rose 1.7% this July compared with that of July 2023, exceeding the consensus forecast of a 0.7% rise. For the first time in three months, the month-on-month change was positive, with a 2.1% rise in July compared with June.
SA’s manufacturing purchasing managers index (PMI) rose sharply at the end of the third quarter to 52.8 points in September up from 43.6 in August.
The survey results showed domestic and export demand rising, which bodes well for manufacturing performance.
The survey, published by Absa and the Bureau for Economic Research, has been volatile in recent months but, despite the drop in August, the average PMI for the first quarter was just below the 50 point mark at 49.6 points compared with PMIs of 47.9 in the second quarter and 48.2 in the first.
Nedbank economists Isaac Matshego and Busisiwe Nkonki said they expected manufacturing production to continue to improve in August, with the annual growth rate rising to 2% from 1.7% in July, reflecting a stable power supply and a modest increase in consumer spending and global demand.
However, they said, mining production probably remained weak in August, depressed by lower commodity prices and weak demand from China. “Nonetheless, we forecast the rate of contraction in mining to have slowed to 0.5% from 1.4%.”
Year to date (January to July), mining output was up marginally by 0.2%, compared with a 1.7% drop in last year’s matching period, said FNB chief economist Mamello Matikinca-Ngwenya.
On Monday, the Reserve Bank will publish data on gross foreign exchange reserves for September. Gross reserves rose to $63.2bn in August from $62.3bn in July.
Higher gold prices continue to support rising gold reserves, said Matikinca-Ngwenya. “Valuation and asset price adjustments have also supported higher special drawing rights holdings and foreign exchange reserves. These were marginally countered by foreign exchange payments made on behalf of the government.”
Nedbank expects a further rise for September to about $63.84bn helped by growth in foreign exchange reserves and a rise in gold reserves.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
ECONOMIC WEEK AHEAD: Mining and factory data in spotlight
Economists expect manufacturing production to continue to improve
The main local economic releases this week will be manufacturing and mining production for August, which will be published by Stats SA on Thursday.
Economic activity in the manufacturing sector was off to a good start at the beginning of the third quarter with output for July improving above expectations.
According to Stats SA’s July data, manufacturing production rose 1.7% this July compared with that of July 2023, exceeding the consensus forecast of a 0.7% rise. For the first time in three months, the month-on-month change was positive, with a 2.1% rise in July compared with June.
SA’s manufacturing purchasing managers index (PMI) rose sharply at the end of the third quarter to 52.8 points in September up from 43.6 in August.
The survey results showed domestic and export demand rising, which bodes well for manufacturing performance.
The survey, published by Absa and the Bureau for Economic Research, has been volatile in recent months but, despite the drop in August, the average PMI for the first quarter was just below the 50 point mark at 49.6 points compared with PMIs of 47.9 in the second quarter and 48.2 in the first.
Nedbank economists Isaac Matshego and Busisiwe Nkonki said they expected manufacturing production to continue to improve in August, with the annual growth rate rising to 2% from 1.7% in July, reflecting a stable power supply and a modest increase in consumer spending and global demand.
However, they said, mining production probably remained weak in August, depressed by lower commodity prices and weak demand from China. “Nonetheless, we forecast the rate of contraction in mining to have slowed to 0.5% from 1.4%.”
Year to date (January to July), mining output was up marginally by 0.2%, compared with a 1.7% drop in last year’s matching period, said FNB chief economist Mamello Matikinca-Ngwenya.
On Monday, the Reserve Bank will publish data on gross foreign exchange reserves for September. Gross reserves rose to $63.2bn in August from $62.3bn in July.
Higher gold prices continue to support rising gold reserves, said Matikinca-Ngwenya. “Valuation and asset price adjustments have also supported higher special drawing rights holdings and foreign exchange reserves. These were marginally countered by foreign exchange payments made on behalf of the government.”
Nedbank expects a further rise for September to about $63.84bn helped by growth in foreign exchange reserves and a rise in gold reserves.
erasmusd@businesslive.co.za
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