SEIFSA Welcomes February Rebound In PPI For Intermediate Manufactured Goods

Johannesburg, 28 March 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the latest Producer Price Index (PPI) data – released by Statistics South Africa (Stats SA) today – for intermediate manufactured goods, which reflect a rebound in the PPI for intermediate manufactured goods, considered a proxy for selling price inflation for the metals and engineering (M&E) cluster, SEIFSA Economist Marique Kruger said.

The latest data indicate that the annual percentage change in the PPI for intermediate manufactured goods, which is a measure of factory gate prices, increased from 3.8 percent in January 2019 to 3.9 percent in February 2019. The
month-on-month movement in the PPI for final manufactured goods was 0.3 percent in February 2019.

Ms Kruger said a weaker exchange rate continues to be the underlying driver of volatility in PPI, thereby increasing the costs of imported intermediary inputs.

“For context, the rand/dollar exchange rate depreciated by 16.7 percent year-on-year in February 2019 from R11.82/US$ to R13.80/US$. Supply constraints have also contributed to the volatility in selling prices. Increasing input costs, which include rising fuel prices and energy costs, are a concern to businesses, which find it difficult to pass cost increases into the market, given the prevailing subdued domestic demand conditions,” Ms Kruger said.

She said that an increasing trend in the PPI for intermediate manufactured goods augurs well for the broader manufacturing sector as it enables businesses to be more competitive and improve on the differential between input costs and margins.

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people

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