South African manufacturing declined the most in almost five years in July after a four-week strike disrupted factory output.
Production shrank 7.9 percent from a year earlier, compared with a revised 0.2 percent expansion in June, the Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 15 economists was for a 5.8 percent contraction.
Output fell 3.6 percent in the month. About 220,000 workers downed tools over pay in July, forcing carmakers like General Motors Co. (GE) to temporarily shut their plants. That followed a five-month strike at the world’s largest platinum producers that weighed on mining and manufacturing, industries that together account for about a fifth of the economy.
Mining output dropped 7.7 percent in July from a year earlier, the statistics agency said in a separate report today.
“We’ve seen very poor performance in both mining and manufacturing and that is no doubt going to add to broader concerns over the economic growth trajectory,” Manisha Morar, an economist at ETM Analytics, said by phone from Johannesburg. “We feel that the scales are tilted at this stage toward an unchanged rates decision next week.”
Inflation Band
The Reserve Bank will announce its interest-rate decision on Sept. 18. Inflation above the bank’s 3 percent to 6 percent target band has led the Monetary Policy Committee to raise the benchmark repurchase rate by 75 basis points to 5.75 percent this year, even as Africa’s second-largest economy will probably expand at the slowest pace in 2014 since the 2009 recession, according to forecasts from the central bank.
The gap on the current account, the broadest measure of trade in goods and services, widened to 6.2 percent of gross domestic product in the second quarter after exports dropped, the bank said this week. The decline in factory output reported today was the deepest since October 2009, when it slumped by 10.3 percent.
Prospects for both manufacturing and mining (SAMPTGDY) “are slim and the reason for that would be that the external demand outlook is still quite uncertain,” Morar said. “Internal demand has also come under notable strain and in that respect we don’t see prospects for a material pick-up in growth in the coming months.”
The rand weakened 0.4 percent to 10.9750 per dollar as of 1:54 p.m. in Johannesburg. The yield on the benchmark government bond due December 2026 fell less than 1 basis point to 8.18 percent.
bloomberg.com
Production shrank 7.9 percent from a year earlier, compared with a revised 0.2 percent expansion in June, the Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 15 economists was for a 5.8 percent contraction.
Output fell 3.6 percent in the month. About 220,000 workers downed tools over pay in July, forcing carmakers like General Motors Co. (GE) to temporarily shut their plants. That followed a five-month strike at the world’s largest platinum producers that weighed on mining and manufacturing, industries that together account for about a fifth of the economy.
Mining output dropped 7.7 percent in July from a year earlier, the statistics agency said in a separate report today.
“We’ve seen very poor performance in both mining and manufacturing and that is no doubt going to add to broader concerns over the economic growth trajectory,” Manisha Morar, an economist at ETM Analytics, said by phone from Johannesburg. “We feel that the scales are tilted at this stage toward an unchanged rates decision next week.”
Inflation Band
The Reserve Bank will announce its interest-rate decision on Sept. 18. Inflation above the bank’s 3 percent to 6 percent target band has led the Monetary Policy Committee to raise the benchmark repurchase rate by 75 basis points to 5.75 percent this year, even as Africa’s second-largest economy will probably expand at the slowest pace in 2014 since the 2009 recession, according to forecasts from the central bank.
The gap on the current account, the broadest measure of trade in goods and services, widened to 6.2 percent of gross domestic product in the second quarter after exports dropped, the bank said this week. The decline in factory output reported today was the deepest since October 2009, when it slumped by 10.3 percent.
Prospects for both manufacturing and mining (SAMPTGDY) “are slim and the reason for that would be that the external demand outlook is still quite uncertain,” Morar said. “Internal demand has also come under notable strain and in that respect we don’t see prospects for a material pick-up in growth in the coming months.”
The rand weakened 0.4 percent to 10.9750 per dollar as of 1:54 p.m. in Johannesburg. The yield on the benchmark government bond due December 2026 fell less than 1 basis point to 8.18 percent.
bloomberg.com
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