Manufacturing production contracted 5.2% year on year (y/y) in February, weaker than expected, as power outages weighed. This was from a revised 4.1% in January.
Statistics SA said on Tuesday that the largest contributions to the decline were made by food and beverages (-6.1%); basic iron and steel, non-ferrous metal products, metal products and machinery (-5.3%) as well as petroleum, chemical products, rubber and plastic products (-4.7%).
Only two of the sub-sectors included in the manufacturing index increased on an annual basis in February, which were the motor vehicles, parts and accessories sector and the radio, television and communication apparatus and professional equipment sectors.
Lara Hodes, an economist at Investec, said the result was weaker than consensus expectations by Bloomberg of a -3.7% y/y decline.
“The dire electricity supply situation remains a key downside risk to the energy intensive manufacturing sector. Indeed, electricity production and consumption fell by a marked -9.7% y/y and -8.7% y/y respectively, in February, with Eskom’s Energy Availability factor (EAF) hovering below 55,” she said.
She said February’s manufacturing production result was in line with the movement of the Absa headline Purchasing Managers’ index (PMI) which slid into contractionary territory in February.
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