The two sectors together account for about a fifth of the economy’s overall output, and there is mounting concern that their problems will significantly curb economic growth and job creation this year.
Manufacturing production rose by 3% compared to the same month last year, slower than the 6.3% rise seen in July but surpassing expectations of a contraction, according to figures from Statistics SA.
Growth is seen as unlikely to hold up in September given the fact that a key survey, SA’s purchasing managers index, showed that activity fell sharply during the month.
"While the numbers may have been surprising, and show that manufacturers are still alive and kicking, it doesn’t mean things are getting better," said Coenraad Bezuidenhout, executive director of the Manufacturing Circle, an industry body.
"We expect the numbers to deteriorate quite a bit in September. Our widening trade deficit is an indicator, and then of course we have the labour unrest."
Weakness in the rand may have given the sector some respite, but this was unlikely to last, he added.
Manufacturing has been affected by mining strikes as there are product linkages between the sectors.
Growth in mining output slowed to a meagre 0.8% year on year, down from 7.1% in July, other figures from Statistics SA showed. During the month itself, output fell by 1.1%.
Analysts had expected a sharper fall in production due to a prolonged strike at Lonmin’s platinum mine at Marikana, in which 46 people died.
Standard Bank economist Thabi Leoka said a possible reason for the more positive outcome could be the fact that the refining for the Lonmin mine takes place off-site.
"We may therefore only see a more significant impact in the September and October numbers," she said. "The mining sector outlook is bleak and the impact of strikes on GDP (gross domestic product) will be significant."
Labour unrest has spread from the platinum to the gold industry, where about 40% of mines are idle. This is worrying, and although mining accounts for only 5% of overall economic output, it generates about half of SA’s export revenue.
The mining data showed that production of platinum group metals declined by 1.9% year on year in August, after a rise of 11.7% in July.
Investec economist Annabel Bishop pointed out that capacity utilisation rates in the manufacturing sector were still low compared to pre-2009 levels and were unlikely to recover soon, given the weakness in both domestic and global growth.
BY MARIAM ISA Source: BD Live
