An ArcelorMittal plant. Picture: RUSSELL ROBERTS
An ArcelorMittal plant. Picture: RUSSELL ROBERTS

The start of a new month puts the focus on the health of the manufacturing sector, both locally and globally.

China’s manufacturing purchasing managers index (PMI) was reported as remaining under the neutral 50 point level in January, coming in at 49.5 points, a slight improvement from December’s 49.4 points.

Japan reported an annual decline in manufacturing production of 1.9% in December, down from 1.5% growth in November.

The statistics showing Asian economies are suffering under US President Donald Trump’s protectionist tariffs set a gloomy tone on Friday morning, contributing to Tokyo’s Topix index declining 0.16% and Hong Kong’s Hang Seng index falling 0.31%.

The monthly Absa-sponsored SA manufacturing PMI done by Stellenbosch University’s Bureau for Economic Research for January is scheduled for release at 11am, followed by January’s new vehicle sales figures at about 2pm.

The monthly poll of factory managers showed a return to over the 50 point level in December.

“The manufacturing PMI averaged below the neutral 50 level in 2018 and over the coming months, the PMI is likely to struggle to consistently remain in expansionary territory, above 50,” Investec economist Kamilla Kaplan said in her weekly note e-mailed on Friday.

“December traditionally sees lower [car] sales volumes as purchases are typically postponed to January so New Year registrations can be obtained. For 2019 as a whole, the National Automobile Association of SA anticipates only a modest improvement of 1% annual growth in sales volumes compared to a contraction of 1% in 2018.”

JSE-listed manufacturing equipment supplier Hudaco released its results for the year to end-November at 5.45pm on Thursday.

Its revenue grew 8.1% to R6.4bn, but its net profit shrank 5.2% to R400m.

It maintained its final dividend at R3.80, taking its total for its 2018 financial year to R5.70, which was 1.8% higher than the previous year’s R5.60.

Hudaco said in its results statement that the engineering consumables market it serves has been in decline for the past decade “partly due to natural boom and bust cyclicality of resources but also in recent years due to conditions in SA not being investment friendly”. 

As an importer, Hudaco said the extreme volatility of the rand in 2018 made pricing exceptionally challenging. The currency strengthened in the first four months and subsequently declined in the remaining eight months. In the period March to September, the rand weakened 33% against the dollar from R11.67/$ to R15.54/$, the results statement said.

At 7am on Friday morning, the rand was trading at R13.29/$, R15.21/€ and R17.41/£.

laingr@businesslive.co.za

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