Lift in manufacturing bodes well for third-quarter economic performance

Aug 1, 2024

Rebound in July likely to be the result of stronger domestic and global demand

​Rebound in July likely to be the result of stronger domestic and global demand   

According to economists at Absa, the number probably reflected improved confidence after the formation of the government of national unity and stabilising electricity supply.

SA has not experienced load-shedding for more than four months. The last time SA enjoyed such a prolonged period of uninterrupted power supply was between March and July 2020, when load-shedding was suspended for 116 days, according to Eskom.

Meanwhile, input cost pressures continued to soften in July, likely the result  of lower fuel prices and a stronger rand. That bodes well for producer price index (PPI) inflation for intermediate manufactured goods, said Absa.

“We believe that fuel price cuts at the start of July and a stronger rand contributed to lower prices during the month. We expect an additional 0.4% month on month of fuel price reductions in August, which could pull down input cost prices further.”

Annual producer price inflation for June was 4.6%, unchanged from May. However, the month-on-month PPI reading decreased 0.3%, according to the most recent data from Stats SA.

Producer price inflation has decreased markedly from 2023’s average of 6.7% and is forecast to average close to 4% in 2024.

erasmusd@businesslive.co.za

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