Manufacturing production fell at an annualized rate of 6.4% in March, which was shocking given that modest growth had been expected.
Manufacturing data for March released by the Bureau of Statistics on Thursday showed the sector was in meltdown, potentially dragging gross domestic product (GDP) into contraction in the first quarter. showed that.
The last manufacturing figures before the May 29 election showed the sector's output fell 6.4% in March from a year earlier, defying expectations for at least some growth. The Reuters consensus forecast was for a 0.4% rise.
In other words, a shocker.
This year, a portion of the Easter holiday coincided with March, which may be a factor, but that alone cannot explain the extent of the decline.
Weak domestic and global demand, lack of confidence, and persistent challenges in South Africa's logistics, crime and power, the last performance in this trifecta showed improvement in March ahead of a stellar April performance However, this was probably at the root of the poor outlook.
On a monthly basis, production decreased by 2.2% in March. Adding all this up, on a seasonally adjusted basis, manufacturing output would be down his 1% in the first quarter compared to his last three months of 2023.
“…the risk of a quarter-on-quarter contraction in the first quarter is increasing. Having said that, much will depend on the release of outstanding economic data in March,” said a senior economist at Oxford Economics Africa. , Gia van der Linde said in a note on the data.
The economy narrowly avoided a recession, defined as two consecutive quarters of recession, late last year. So while the contraction in the first quarter does not portend a recession, it is clearly still a bad situation and bodes poorly for overall economic growth in 2024.
Still, there is a possibility of a rebound in April.
April was particularly marked by the absence of rolling power outages, and advance indicators for the month in the manufacturing sector, such as the Absa Purchasing Managers Index, show that this had a positive impact.
Read more at Daily Maverick: Absa PMI returns to positive territory in April with no rolling power outages
“Despite continued challenges, manufacturing has shown remarkable resilience…Growth should be supported by improvements in shedding intensity, which has stabilized since last year's peak, and moderate increases in domestic demand,” Tanda said.・Mr. Sithole said. Senior Economist at FNB.
Another key indicator for the first quarter is the Quarterly Labor Force Survey, which is scheduled to be released on May 14 and will provide the latest unemployment rate.
Since it takes place just two weeks before the election, it may also have some indication or influence on the political situation. DM
