The statistics however declined by 3.4% in June.

FNB Senior Economist, Thanda Sithole, says that although the 3.7% growth is encouraging, it has partly reflected the statistical base effects of the July 2021 social unrest.

Seasonally adjusted manufacturing output contracted by 0.2% after contracting by a downwardly revised 2.0% in the previous month. The subdued recovery in monthly manufacturing output (seasonally adjusted) and the 3.2% monthly decline in electricity production in July corroborate Sithole's view of a limited recovery in GDP, following a 0.7% decline.

He states that manufacturing output will likely rebound from the weakness that was induced by load-shedding and flooding. "The sector declined by 5.9%, making the largest contribution to the 0.7% decline in GDP. Although load-shedding remains a risk and input costs are only gradually receding, manufacturing PMI signals a recovery in output."

He also explains that Manufacturers expected business conditions to have improved in August and signalled optimism over the six-month horizon. "We expect manufacturing output growth to average around 1.0% this year, reflecting a material deterioration from the 6.5% cyclical rebound in 2021". He is also of a view that although external and domestic demand is expected to moderate next year, easing production costs and supply chain pressures could support manufacturing activity. Sithole also believes that the energy reform plan to curb electricity supply disruptions, as well as reforms to improve transport (roads, rail, and ports) efficiency, should support manufacturing activity over the medium-term.

ALSO READ: GDP decrease not as bad as predicted - economist

Economist and senior lecturer at the University of the Free State, Dr Arno van Niekerk, had previously said the 0,7% decrease in GDP stats is not as bad as he and other economists had thought it would be. According to the statistics, released by Stats SA yesterday, manufacturing decreased 5.9% in the second quarter. Eight out of ten manufacturing divisions reported negative growth rates in that time. In the manufacturing industry, petroleum, chemical products, rubber and plastic products made up the largest contribution to the decrease. Other divisions in the industry that made notable negative contributions to growth include the food and beverages division, motor vehicles, parts and accessories, and other transport equipment division.

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