South African manufacturing growth set to stall

3 September 2010

5 September 2010 | Nick Martindale

Manufacturing growth in South Africa is likely to falter in the second half of 2010, despite expanding in August for the first time in three months.

The South African Purchasing Managers’ Index reached 50.3 in August after two consecutive months in which activity declined. A 50+ figure represents growth.

But André Coetzee, managing director of CIPS Southern Africa, warned that the average growth for the first two months of the third quarter was 49.9, compared with an average growth of 51.6 for all the second quarter.

“The current evidence hints that growth in the manufacturing sector may have moderated further in the third quarter, which does not bode well for overall GDP growth in the second half of 2010,” he said.

The survey of buyers, by Kagiso, found overall business activity (a subset of the index) fell back into negative territory at 46.9 in August, after moving above 50 in July, but the new sales index increased by 3.5 points to 52, suggesting a recovery in demand for factory goods.

Despite fears over the health of the global economy, purchasing managers remained upbeat about the coming months, with business confidence rising from 57.7 to 59.6.

“In light of renewed concern regarding the prospects for the global economy, it is interesting that purchasing managers were somewhat more upbeat about future business conditions,” said Coetzee.

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