Manufacturing production down in June

Tuesday, August 11, 2009

Pretoria - Manufacturing production for the month of June decreased by 17.1 percent compared to a revised 17.2 percent in May, reported Statistics South Africa (Stats SA) on Tuesday.

"The numbers show that the market remains very weak although this moderated from the 17.2 percent recorded last month. The demand conditions remain extremely weak," Nedbank economist Johannes Khosa told BuaNews.

He said that the figures showed that the demand both locally and abroad for big ticket items such as cars and machinery was extremely weak.

According to Stats SA, the decrease was mainly due to lower production in the basic iron and steel, non-ferrous metal products, metal products and machinery divisions.

This was followed by cars, parts and accessories as well as other transport equipment. Chemical products, rubber and plastic products division also contributed to the decrease.

Commenting on retail trade figures which will be released on Wednesday, Mr Khosa predicted that the figures were likely to remain weak. Last month retail trade figures decreased by 4.2 percent compared to April's 6.7 percent.

Also on Wednesday, the South African Reserve Bank (SARB)'s Monetary Policy Committee will begin their two-day meeting after which a decision on interest rates will be made on Thursday.

"We do not anticipate the Reserve Bank to cut interest rates. We don't expect any cuts. We think the bank will continue to focus on the long term inflation outlook," he said.

He further predicted that the next repo rate was likely to come in September and October at 50 basis points respectively. Currently the repo rate stands at 7.5 percent after the central bank in June said the repurchase rate would remain unchanged.