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South Africa’s manufacturing output flat, points to slowing economy

South Africa’s factory output was flat in September from a year ago, data showed on Thursday, contrasting strong second quarter economic growth and increasing the risk of a credit rating downgrade.

Separately, mining output increased by 3.4% year-on-year in September. But analysts said this was not sustainable as commodity prices struggle to recover.

Manufacturing output was flat at 0% year-on-year in September, after expanding by 2.2% in August, Statistics South Africa said. Economists polled by Reuters forecast a 0.1% year-on-year increase in manufacturing volumes.

On a month-on-month basis, factory production was up 1.5% but edged down 1.3% in the three months to September compared with the previous three months.

Capital Economics Africa economist John Ashbourne said in a note that retail figures due next week would give an better idea of how the economy was performing but “the available survey data suggest that consumer spending probably remained weak.”

The economy expanded by 3.3% in the second quarter of 2016 after a contraction in the first quarter, and Treasury sees it expanding by 0.5% this year.

The central bank has said weak growth and political disturbances risked South Africa’s credit rating.

Ratings agencies are due to review South Africa’s rating before the end of the year. Moody’s rates South Africa two notches above subinvestment grade, while Fitch and S&P Global Ratings have it just a step above “junk”.

 

Source: Engineering News