Manufacturing output continues to decline

SOUTH Africa's manufacturing output shrunk by 17,1 percent year-on-year in volume terms in May compared with a revised 21,8 percent contraction in April, according to Statistics South Africa.

SOUTH Africa's manufacturing output shrunk by 17,1 percent year-on-year in volume terms in May compared with a revised 21,8 percent contraction in April, according to Statistics South Africa.

The agency also revealed yesterday that the country's gold output fell 10,5 percent in May 2009 compared with the same month last year.

South Africa is the world's third-largest gold producer behind China and the US. Compared to May last year, manufacturing production in volume terms rose by a seasonally-adjusted 1 percent.

Factory output was down 3 percent in the three months to May compared with the previous three months, also on a seasonally-adjusted basis.

Economist Salomi Odendaal of Citadel said manufacturing remained weak in the second quarter and it would remain so. Though the speed at which it was deteriorating slowed compared with the first quarter.

"Looking at the month-on-month rise, we don't expect it to start rising, it will stabilise.

"It can't keep falling the way it has. The sector is now waiting for demand to pick up. Until that happens, it's going to remain weak," Odendaal said.

Nedbank's Nicky Weimar said while the figures were weak, the outlook was "definitely better".

"But the fact that it is still declining by 17 percent is not good and it suggests that manufacturing in the second quarter remained very, very weak, and that's going to be a major drag on Gross Domestic Product."

The manufacturing sector is the second biggest contributor to the economy, accounting for about 15 percent of Gross Domestic Product. - Reuters and Sapa

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