SA June manufacturing production up 0.5% y/y

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The weakness in output‚ however‚ still suggests muted economic growth in the second quarter given that manufacturing is the economy's second-biggest sector.

Production rose by 0.5% in June 2014 compared with June 2013‚ after contracting by 3.8% in May and by 1.9% in April‚ Statistics SA figures showed.

Manufacturing production increased by 1.4% between May and June 2014.

ETM Analytics analyst Manisha Morar said the increase in manufacturing output could have been supported by manufacturing subsectors that built up stockpiles in June ahead of a strike by steel- and engineering-sector workers that occurred in July.

However‚ Morar said challenges remained for the sector.

"South Africa is still faced with numerous supply-side constraints and we therefore still view the broader prospects for the sector as being unfavourable‚" she said.

Nedbank economist Busisiwe Radebe said although the data were better than expected‚ the steel and engineering strike would have caused "lacklustre" output in manufacturing in July.

Stats SA reported that the 0.5% increase was supported by higher production in the petroleum‚ chemical products‚ rubber and plastic products division; and the production of food and beverages.

The motor vehicles‚ parts and accessories and other transport equipment division‚ which unsurprisingly fell 11.3% and shaved off 1.1 percentage points from manufacturing production‚ was a significant negative contributor.

A five-month-long strike at platinum mines disrupted the production of motor vehicles‚ parts‚ and accessories and other transport equipment. Platinum group metals are important inputs in the production of vehicles‚ parts and other transport equipment.

Seasonally adjusted manufacturing production fell by 0.4% in the second quarter of 2014 compared with the first quarter of 2014‚ Stats SA reported.

Six of the 10 manufacturing divisions reported negative growth rates over the period.