By Vivian Atud
What: Statistics South Africa (Stats SA) will today at 13:00 p.m. release the manufacturing and sales figures for November 2014. Manufacturing remains a key sector of the South African economy.
Figure 1: Breakdown of gross value added by industry, 2012 (proportions)
(Source: Stats SA, 2013)
According to figure one, manufacturing is a key sector and second biggest contributor to value added to the SA economy. The SA government has prioritised manufacturing among other sectors as key drivers of growth and job creation. The manufacturing sector has various sub components including: textile, motor vehicle, food and beverages, Television and radio, furniture, and basic iron and steel. As we await the publication for the manufacturing and sales figures for November this afternoon one should expect an increase from the October 2014 figures.
Why: According to Stats SA, manufacturing production increased by 2, 2% in October 2014 compared with October 2013.The 2,2% year-on-year increase in manufacturing production in October 2014 was mainly due to higher production in the following divisions:
- motor vehicles, parts and accessories and other transport equipment (10,3% and contributing 0,9 of a percentage point);
- food and beverages (2,1% and contributing 0,5 of a percentage point); and
- petroleum, chemical products and rubber and plastic products (1, 6% and contributing 0, 4 of a percentage point).
One should expect an increase in the November 2014 figures to be published today for the following reasons: There were no production interruptions in November as it fell outside the strike season. The was significant demand pull from various components of the manufacturing sector due to the festive season including motor vehicles, textiles and food and beverages. These should cumulatively impact positively on the manufacturing and sales data for November to be released later today.
So what: markets will be marginally impacted by the release of the manufacturing and sales data to be released today as most analyst expect an increase. However, the figure maybe worsen in the first half of 2015, if Eskom implements power cuts. The fear of power cuts continue to send negative sentiments about the sector to the markets and would impact on investments in the sector. The JSE should show marginal improvements today after closing 1.3 percent in negative territory last week Friday.
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