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The SA Daily 12 July 2018

Production still poor

Shireen Darmalingam

  • Mining production growth contracted by 4.3% y/y in April. January to April, mining production contracted 2.2% y/y (5.0% y/y over the same period in 2017), confirming our view of a bleak outlook. Mining data for May is due out today and Bloomberg consensus is for a contraction of 3.5% y/y, which does not bode well for GDP. Persistently poor performance in mining production mirrors the uncertainty over policy issues such as the Mining Charter and land expropriation without compensation.
  • Manufacturing production increased by 1.1% y/y in April. The May  numbers are due out today and Bloomberg consensus is for production to have swung into negative territory. Nonetheless, we expect modest growth for manufacturing in 2018 but the risks are tilted to the downside. An acceleration in manufacturing production is only expected in 2019.
  • The BER manufacturing PMI slipped in June. We believe that the manufacturing sector will remain volatile amid the global trade war and the unresolved domestic issues such as land expropriation. The spectre of further load-shedding hardly helps matters for SA manufacturing.

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