Manufacturing output expanded by 1.9% year on year (y/y) in November, however, despite the moderate annual growth conditions in the sector remained lacklustre.
This was a slight moderation from the upwardly revised 2.3% y/y expansion in October.
Statistics South Africa said yesterday the largest contributions were made by wood and wood products, paper, publishing and printing up 8% as ell as motor vehicles, parts and accessories and other transport equipment, rising 5.7%.
This as a break-down of the manufacturing production numbers indicated that eight of the 10 categories included in the manufacturing basket increased annually in November.
The largest negative contributions were made by food and beverages, down 2%, while basic iron and steel, non-ferrous metal products, metal products and machinery slid 1.4%.
Seasonally adjusted output, aligning with the official calculation of quarterly gross domestic product growth, expanded by 0.8% month on month, rebounding from a 0.1% monthly decline in the prior month.
This aligned with the manufacturing PMI business activity index, which rose to 46 points from 40.3 points during the corresponding period.
Thanda Sithole, a senior economist at FNB, said, looking ahead, said, “Manufacturing output appears to have achieved marginal growth in 2023, marking a modest rebound from the 0.4% decline in 2022. In the near term, production is expected to remain lacklustre, influenced by weak domestic and external demand, along with ongoing infrastructure challenges.
“However, there is potential for manufacturers to increase production beyond the near term as demand conditions improve and infrastructure capacity expands,” she added.
Lara Hodes, an economist at Investec, said despite, November’s moderate annual growth, conditions in the manufacturing sector remain lacklustre.
According to the Absa manufacturing survey for quarter four 2023, the index measuring confidence “has shown little improvement over the past three years and remains far below the long-term average of 37”. “The current level implies that roughly 7 out of 10 respondents were unsatisfied with prevailing business conditions”.
She said South Africa’s numerous domestic challenges including electricity supply and logistical constraints continued to impede optimal activity. The intensity of load shedding was ramped up towards the end of November, while congestion at the ports would have weighed of the delivery of significant inputs.
Moreover, Hodes said, the still subdued global manufacturing environment continued to undermine export potential. The JP Morgan Global Manufacturing PMI remained in contractionary terrain (under 50) in November, although survey results point to “the manufacturing downturn softening”.
BUSINESS REPORT