Johannesburg, 26 July 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the increase in the Producer Price Index (PPI) for intermediate manufactured goods published by Statistics South Africa (Stats SA) today. The continuous improvement in the data – which measures the average change in selling prices received by domestic producers – in the midst of a global trade war and increased prospects of less synchronised global growth and uncertainty is good for the metals and engineering (M&E) cluster, the Federation’s Chief Economist Michael Ade said.
The StatsSA data showed that the PPI for intermediate manufactured goods increased to 3,1 percent year on year in June 2018, from 0,2 percent recorded in May 2018. This is in line with a corresponding increase in the PPI for final manufactured goods for the broader manufacturing sector from 4,6 percent in May 2018 to 5,9 percent in June 2018. The performance provides some level of solace to local producers in the M&E cluster against the backdrop of worrisome tit-for-tat protectionist trade policies by the two largest economies in the world.
“The increase in both measures of domestic producer prices for June 2018 is welcome to businesses in this difficult economic environment characterised by high fuel prices, weaker exchange rate, lower retail sales and higher energy costs,” Dr Ade said.
He added that the improving selling price trend in June increases the chances of businesses being able to recover input costs by passing higher prices onto the market. This is important especially given that there was a corresponding dip in business confidence to 93.7 in June 2018 from 94.9 in June 2017, as captured by the South African Chamber of Commerce and Industry’s annual Business Confidence Index.
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