Manufacturing sector's performance disappointing

Statistics SA's figures released on Thursday (7 February) showed that manufacturing production increased by 2% year-on-year in December‚ well below market expectations for 2.6%‚ and fell 2.2% month-on-month after a 2.6% month-on-month increase in November.

The 2.0% year-on-year increase was due to higher production in the divisions of petroleum‚ chemical products‚ rubber and plastic products‚ with 9.5% and contributing 2.3 percentage points; motor vehicles‚ parts and accessories and "other" transport equipment‚ with 10.9% and contributing 0.8 of a percentage point).

Furniture and "other" manufacturing and glass and non-metallic mineral products also contributed.

Overall production for last year reflected increased by 2.0% compared with a 2.6% increase in 2011‚ reflecting a year dominated by weaker exports and muted global and domestic demand.

The seasonally adjusted manufacturing production in the fourth quarter was more encouraging‚ according to economists‚ as it increased by 1.6% compared with the third quarter‚ with six of the ten manufacturing divisions reporting positive growth over the period.

"This will assist the fourth quarter estimate of SA's GDP growth‚ after a disappointing contribution from manufacturing in previous quarters‚" Stanlib economist Kevin Lings said.

"The quarter-on-quarter seasonally adjusted annualised growth was 1.6% for the fourth quarter‚ so we see manufacturing adding between 0.2 and 0.3 percentage points to GDP growth‚" Standard Bank economist Shireen Darmalingam said.

Manufacturers represented by industry body Manufacturing Circle said last month that they expected a better operating environment this year compared with last year mainly on a forecast improvement in the global economy and more export markets in other African countries.