Manufacturing falls 17.1%

According to Stats SA, May's data was mainly due to lower production in the basic iron and steel, non-ferrous metal products, metal products and machinery division (-24.9%), followed by motor vehicles, parts and accessories and other transport equipment (-32.2%) and the petroleum, chemical products, rubber and plastic products division (-14.6%).

The seasonally adjusted manufacturing production for the three months ended May 2009 decreased by 3% compared to the previous three months. This was an improvement from the 4.4% quarter-on-quarter decrease in April 2009.

“Lower production levels were reported by eight of the ten manufacturing divisions during the last three months,” said Stats SA.

Commenting on the data, Nedbank economist Nicky Weimer said: “The economy is still very weak. We're looking at a difficult second quarter. This will be hard on our Gross Domestic Product number.”

Stats SA also reported on Thursday that mining production for May fell by 14.5% compared to the same month last year.

“Mining production for May 2009 decreased by 14.5% compared with May 2008, reflected by gold and non-gold minerals production decreasing by 10.5% and 15.1% respectively,” reported Stats SA.

Weimer said that the mining production data also showed that there is very little demand from both the local and global economy.

She added that she expected the Monetary Policy Committee to reduce interest rates by between 50 and 100 basis points when it meets again.

Article published courtesy of BuaNews