South African factory output contracted for a fifteenth month in August even as coronavirus-lockdown measures were eased allowing activity to resume in the sector.
Output fell 10.8%, compared with a revised 10.2% decline in July, Statistics South Africa said Monday in a report published on its website. The median estimate of seven economists in a Bloomberg survey was for a 7.8% drop. Production rose 3.6% in the month.
Key Insights
- The decline in output means that the manufacturing sector, that accounts for about 11% of gross domestic product, could weigh on an economy that the central bank sees rebounding to grow an annualized 45.2% in the third quarter after a 51% contraction in the three months through June.
- The gradual easing of lockdown measures allowed businesses to rebuild stock levels, according to Absa Group Ltd.'s Purchasing Managers' Index. While the gauge jumped to a 21-year high in September, it likely overstates the extent of the recovery in the sector and is probably more reflective of improving conditions as the economy reopened, the lender said. The index has been flitting between growth and contraction for most of the past decade due to power shortages and low business confidence.
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