South African manufacturing recovers its footing (partly)

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By Cees Bruggemans, Chief Economist of FNB.

Manufacturing output improved from a revised year-on-year of +2.3% in October to +4.6% in November, a gratifying rebound after the 3Q2010 dip.

This was clearly a comeback from the strike-riddled 3Q2010, but it was ultimately not as impressive as it could have been.

Granted, motor industry output jumped 30% year-on-year, with motor vehicles doing +56% and parts and accessories +18%. Basic chemicals did +30%.

Though impressive, a lot of this was catch-up after the strikes lowered output severely.

But oil refining (a major sector) did -16%, basic iron and steel (another major sector) did -19%. Textiles and clothing did -4%.

Overall, manufacturing has yet to recover its mid-2010 peak activity level and there are clearly still areas dragging their feet. Overall, manufacturing output remains well clear of its 2Q2008 cyclical peak, so far having clawed back only just less than half its recession losses.

Yes, the sector is once again resuming its advance after being strike-bound, but it has a long way to go, with capacity utilization in 3Q2010 still a low 80%.

Source: Cees Bruggemans, FNB,  January 13, 2011.

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