The manufacturing sector staged a surprise improvement in October, with production rising 0.2% year on year — confounding expectations of a continued slump in heavy industries. Economists had predicted a contraction, citing persistent weakness in key sectors. However, eight of the 10 manufacturing divisions recorded growth in October, according to data published byStats SAon Thursday.
The main contributors were the food and beverages division, up 1.9% and adding 0.5 percentage points to total output, and electrical machinery, which surged 6.5% and contributed 0.2 percentage points. Glass and non-metallic mineral products also declined, falling 5.8% and subtracting 0.2 percentage points. Despite the surprise annual increase, the figures point to a fragile and uneven recovery.
Seasonally adjusted production rose 1.0% month on month, following smaller increases of 0.3% in September and 0.4% in August. On a quarterly basis, output was up just 0.4% in the three months to October. The divisions driving quarterly growth included petroleum, chemical products, rubber and plastic and furniture and “other” manufacturing, which grew a robust 9.9%.
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However, manufacturing sales weakened in October, falling 0.8% month on month in seasonally adjusted terms. This suggests ongoing demand-side challenges despite improving output conditions. Over the latest three-month period, seasonally adjusted sales were up 1.0%.
The basic iron and steel, non-ferrous metal products, metal products and machinery division made the largest contribution. The performance may offer modest support to fourth-quarter GDP; however, risks remain.
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