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South Africa Manufacturing Decline Slows on Food and Drinks
South Africa Manufacturing Decline Slows on Food and Drinks
10 Nov 2020, 05:21 PM IST
(Bloomberg) -- South African factory output contracted less than forecast and at the slowest pace in seven months in September on increased production of food and beverages.
Output fell 2.6%, compared with a revised 11.1% decline in August, Statistics South Africa said Tuesday in a report published on its website. The median estimate of nine economists in a Bloomberg survey was for a 7.7% drop. Production rose 3.2% in the month.
Key Insights
- The largest positive contribution came from food and beverages in September, the first full month that alcohol was allowed to be sold again following the end of a second curb on liquor trade.
- Production rose by 32.9% in the three months through September, which means the manufacturing sector, which accounts for about 11% of gross domestic product, may have made a positive contribution to overall output in the third quarter. The statistics office will publish GDP data for the period on Dec. 8 after reporting an annualized 51% contraction for the previous three months.
- Demand for manufactured products continued to recover with the gradual easing of the lockdown, according to Absa Group Ltd.’s Purchasing Managers’ Index. The gauge jumped to a record in October. While this signals a strong start to the fourth quarter, some businesses reported demand and capacity nearing normal, pre-Covid-19 levels, which means the rebound in output could start to flatten.
- Manufacturing could also face headwinds from renewed restrictions in Europe that sparked fears demand for South African exports will decline.
©2020 Bloomberg L.P.
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