By Thanda Sithole
May mining output weakens
Total manufacturing production, not seasonally adjusted, declined by 0.6% y/y in May, following a downwardly revised 4.9% increase (previously 5.3%) in April. The outcome was worse than Reuters' consensus prediction of a 2.4% increase. Seasonally adjusted output fell sharply by 3.2% m/m, partially reversing the 5.2% monthly increase in April. This aligns with the manufacturing PMI business activity index, which fell deep into contractionary territory in May, reaching 38.1 points from 57.2 in April. Worryingly, the business activity index fell further in June, indicating that output likely weakened further at the end of 2Q24. For the three months ending in May, output was down by 0.4%, suggesting that the manufacturing sector, pending the June data, could again drag GDP growth in 2Q24.
Outlook
At 0.7% year-to-date, manufacturing output growth is consistent with our view of sub-1% growth this year, underscoring weak domestic demand and unsupportive external conditions. We expect a gradual recovery over the medium term as demand conditions improve and energy supply constraints ease further. In the June manufacturing PMI data, manufacturers expressed optimism, anticipating improved operating business conditions over the near term.
Selected sector analysis
The 0.6% y/y contraction in output reflected weakness in the following manufacturing divisions:
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Motor vehicles, parts and accessories, and other transport equipment declined sharply by 11.8% following a 7.0% increase in April. Within this division, parts and accessories declined by 21.4% and have been declining by 12.8% over the past ten months. Production of bodies for motor vehicles, trailers, and semi-trailers also declined by 18.4%. Meanwhile, motor vehicle production grew by 2.3% after increasing by 12.4% in April.
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Basic iron and steel, non-ferrous metal products, metal products, and machinery declined by 8.1% y/y, following 3.6% growth in April.
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Textile, clothing, leather, and footwear experienced a mild decline of 0.6% from a 3.4% increase in April, with footwear falling by 9.9% and textiles by 4.5%.
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Furniture and “other” manufacturing declined by 4.6% following slow growth of 1.1% in April.
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Electrical machinery output was down by 0.6% after expanding by 15.4% in April.
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Radio, TV, and communication apparatus, professional equipment declined by 2.3% after increasing by 11.2% in the prior month.
Positive growth:
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Wood and wood products, paper, publishing, and printing increased by 4.2% after a 9.7% increase in April, supported by increased activity in printing and recorded media.
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Glass and non-metallic mineral products expanded slowly by 0.4% after a 5.8% increase in April.
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Petroleum, chemical products, rubber, and plastic products increased by 2.7%, after a 2.9% increase in April, reflecting increased activity in basic chemicals and plastic products.
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Food and beverages outputexpanded by 7.2%, advancing from a 4.3% increase in April, reflecting increased activity in other food products, meat, fish, fruits, and beverages.
