Manufacturing production for June worse than expected

iStock
iStock

Manufacturing production decreased by 3.2% in June, against market expectations of a 1.6% decrease.

Stats SA on Thursday released the latest figures, which reflected a considerable deterioration from May's modest improvement of 0.4%.

There was a decline in production levels in all sectors, except food and beverages, which increased by 3.7%.

"A breakdown of June’s data suggests that the decline was broad based, with only the food and beverage category experiencing growth," Investec economist Lara Hodes noted in a report.  

"The Petroleum, chemical products, rubber and plastic products sector, which comprises a marked 23.1% of the manufacturing index, was the largest negative contributor to June’s outcome.

"It declined by 6.7% y/y, in turn slicing 1.7% off the topline number, with the coke, petroleum products and nuclear fuel segment predominantly responsible for the disappointing result," Hodes added.

"In all, the potential of a solid recovery in manufacturing output remains constrained by the lack of sustained demand. Domestically the consumer remains under pressure, with unemployment sitting at 29.0%, while globally lingering trade war tensions could further impede export prospects," she said.

Steel and Engineering Industries Federation of Southern Africa economist Marique Kruger said the decline in production figures reflects the "constrained" business environment for manufacturing companies.

"The dip in the year-on-year manufacturing output data highlights the urgent need to deal with underlying dynamics leading to a depressed economic environment and high unemployment numbers," she added.

However, Kruger anticipates an upturn in second quarter GDP figures and said companies in the manufacturing sector should take advantage of this to grow the economy and create jobs.

ZAR/USD
16.78
(+0.13)
ZAR/GBP
21.16
(+0.24)
ZAR/EUR
18.98
(+0.11)
ZAR/AUD
11.69
(-0.08)
ZAR/JPY
0.16
(+0.27)
Gold
1805.50
(+0.32)
Silver
19.05
(+1.57)
Platinum
837.00
(+1.63)
Brent Crude
43.02
(0.00)
Palladium
1978.01
(+1.36)
All Share
55881.56
(+0.84)
Top 40
51569.42
(+0.81)
Financial 15
10607.52
(+1.29)
Industrial 25
76440.13
(+0.40)
Resource 10
53123.99
(+1.22)
All JSE data delayed by at least 15 minutes morningstar logo
Company Snapshot
Voting Booth
Please select an option Oops! Something went wrong, please try again later.
Results
I'm not really directly affected
18% - 1977 votes
I am taking a hit, but should be able to recover in the next year
23% - 2590 votes
My finances have been devastated
34% - 3850 votes
It's still too early to know what the full effect will be
25% - 2768 votes
Vote