SA May manufacturing +7.9% y/y

Manufacturing output has been in positive territory for six months now, signifying stronger growth in the economy's second biggest contributor to gross domestic product (GDP), but the portents are not looking good going forward.

This comes after the seasonally adjusted Kagiso Purchasing Managers' Index (PMI) declined for the fourth consecutive month in June - the worst fall in the current cycle as the index dipped below the critical 50 mark to 48.4.

The PMI is a good leading indicator for the total output figure that follows a month later and this has added to some calls for the need for a rate cut later this month to spur the economy on.

Good growth

Sectors recording the best growth were the motor vehicles, parts and accessories and other transport equipment division (27.1% and contributing 2.5 percentage points), the petroleum, chemical products, rubber and plastic products division (10.0% and contributing 2.4 percentage points), and the basic iron and steel, non-ferrous metal products, metal products and machinery division (9.8% and contributing 2.0 percentage points).

The food and beverages division added 3.8% and contributed 0.7 of a percentage point, while the electrical machinery division were up 8.4% and 0.3 of a percentage point, the wood and wood products, paper, publishing and printing division 3.4% and 0.3 of a percentage point and the glass and non-metallic mineral products division 1.5% and 0.1 of a percentage point.

Adjusted figures

The seasonally adjusted manufacturing production for the three months ended May 2010 did not display stellar growth as it increased by 1.0% compared with the previous three months ended February 2010. The percentage change between April and May was an even lower seasonally adjusted 0.3%.

Higher production levels were reported by six of the ten manufacturing divisions during the latest three months.

Manufacturing sales of products were reported to be up 9.3% y/y to R102.364 billion.