Nedbank tells us that annual growth in manufacturing production slowed to 0,4 % in June, from a downwardly revised 2,1 % in May, and compared with market expectations of 3,8 %. Total mining output shrunk 6.2 % y-o-y in June after a 1.1 % decline in May. On a seasonally adjusted basis, mining production was down by 3.0 % m-o-m and was up by 0.1 % q-o-q for the second quarter. What do our experts think?
Nedbank Economic Unit:
These manufacturing production figures, together with the weak mining production data released earlier today, highlight that production and exports remain under pressure, which will impact on growth negatively. The latest mining numbers continue to reflect the tough business conditions in a sector beset by labour instability, falling commodity prices and rising production costs. Prospects for the mining sector remain poor as global demand conditions will remain unfavourable for the foreseeable future.
Coenraad Bezuidenhout of the Manufacturing Circle:
While the StatsSA figures released today show South African manufacturing capacity is principally under-utilised because of a lack of demand, general indications are that this would be mostly on the back of teetering domestic demand, as exports have enjoyed support from the weaker rand. Indicators in respect of current research being undertaken by the Manufacturing Circle would seem to indicate that demand from African export markets are currently enjoying a surge.This would suggest that international players wishing to use South Africa as a manufacturing base from which to export to African markets would serve their interests best partnering with established South African manufacturers, where their product lines and distribution networks may be complimentary.
Conclusion:
Both manufacturing and mining numbers show an economy under strain.
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