was successfully added to your cart.

Encouraging Performance for Metals and Engineering Sector Projected To Continue

By | Featured, Press Releases | No Comments

JOHANNESBURG, 8 FEBRUARY 2019 – Despite 2018 being a generally challenging year for both the global and domestic economy, the Metals and Engineering (M&E) sector is poised for a third annual consecutive growth in 2019.

This is according to the Steel and Engineering Industries Federation of Southern Africa (SEIFSA), which this morning officially released its authoritative State of the Metals and Engineering Sector Report for 2019-2020.

Gien the auspicious performance of the M&E cluster of industries in recent years, this year’s Report was published under the theme of “Sharpening the saw –  continuously improving industry activity and competitiveness”.

SEIFSA Chief Economist Michael Ade said the Federation’s forecast is for the entire M&E sector to expand moderately by 1.8% in 2019.  However, the various sub-sectors will register varied levels of growth, with some expanding and others contracting in 2019.

“The prognosis aligns with the outlook for both a moderating global growth and domestic growth in 2018, underpinned by a slowdown in the pace of recovery in commodity exporters, deceleration of growth in commodity importers, a slowdown of growth in global goods and industrial activity during the first half of 2018 and the imposition of broad-based tariffs by the United States on steel and aluminium imports. These developments have serious implications for the growth prospects of the M&E sector, which exports the bulk of its iron and steel products,” said Dr Ade.

Prices of most metals weakened in 2018, largely due to concerns about the effects of tariffs on global growth and trade, with industrial metals particularly responsive to these concerns, given their many uses in the manufacture of tradable goods. However, the expectation is for metal prices generally to stabilise in 2019 and 2020, thereby strengthening exports and improving growth prospects for commodity exporters – including the M&E cluster of industries –  along with enhanced capital inflows.

However, this view is not without downside risks. These include the persistence of trade tensions, diminishing industrial activity, softening of international trade and investment and substantial financial market pressures on some large emerging market and developing economies (EMDEs). Dr Ade said that trade tensions between the US and China, including the imposition of tariffs on an array of products, have had varying effects on metal and agricultural commodities. He said the tensions, which affected roughly 2.5% of global goods trade and had implications for South Africa, continue to remain elevated.

Dr Ade said tighter external financing conditions – which contributed to significant capital outflows and more significant currency pressures in more vulnerable EMDEs, including South Africa – have the propensity of increasing external borrowing costs and the general cost of doing business, also negatively affecting production and foreign fixed investment into the sector.

“To confront this increasingly difficult environment, the most urgent priority is for EMDE policymakers to prepare for possible bouts of financial market stress and rebuild macroeconomic policy buffers as appropriate. Equally importantly, policy makers have to foster stronger potential growth by boosting human capital, removing barriers to investments and promoting trade integration within a rules-based multilateral system,” said Dr Ade.

He said that despite these downside risks, the M&E sector’s moderate growth prospects in 2019 is influenced by the positive growth prospects for key industries which are important markets for the M&E sector’s intermediary products and are crucial in the sector’s value chain.  He said  the performance of the domestic economy, which is forecast to grow at 1.3% in 2019 and 1.7% in 2020, supported by continuous improvement of regional markets in Africa, would also impact positively on the sector’s growth prospects.

According to Dr Ade, Sub-Sahara Africa is envisaged to improve moderately in 2019 (3.4%) and in 2020 (3.6%), providing a basis for more exports from the M&E sector. He said it was likely that this would translate into continued exports, bringing in much-needed foreign currency. He said this was especially so given the fact that Africa is the highest export destination for goods produced by companies in the M&E cluster.

Dr Ade said that 2018 was yet another better year for the M&E sector as it expanded for the second consecutive year, registering an improved estimated annual growth of 2.0%, despite facing serious structural headwinds, including a technical recession in the broader economy. He said  the momentum was expected to continue in 2019.

Dr Ade said notwithstanding  continuous constraints to the current potential to improve on margins in the M&E sector, all indications are that the sector will record another increase in growth during 2019, barring any major disruptions to production

“Given the recent resilience in production in the M&E sector, despite companies facing domestic headwinds, a need exists to ensure that the sector remains attractive by directly reducing increasing intermediate input costs and managing borrowing costs in order to improve consistently on the bottom line, exists,” Dr Ade concluded.

 

 

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.meindaba. seifsa.co.za

 

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.

Decrease In The Purchasing Managers’ Index For January 2019 Disappointing, Says SEIFSA

By | Featured, Press Releases | No Comments

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is disappointed by the decline in overall business activity in the broader manufacturing sector as reflected in the Absa Purchasing Managers’ Index (PMI) released today.

The data shows a slight dip in broader manufacturing activity in the country, registering a decrease against the backdrop of a strong performance last month. The preliminary seasonally-adjusted data showed that the PMI deteriorated from 50.7 points in December 2018 to 49.9 points in January 2019, with the data once again slipping below the benchmark level of 50, which separates expansion from contraction.

SEIFSA Economist Marique Kruger said when compared to December 2018 when the manufacturing sector trended in an expansionary region of 50.7 points, it is evident that there is a deterioration in the business activity index. This is a concern for the metals and engineering (M&E) cluster, especially given the prevailing low levels of domestic demand.

“It is also disheartening to note that nearly all five of the seasonally-adjusted
sub-components correspondingly registered decreases in January 2019 when compared to the previous month, with three out of the five sub-indices trending below the neutral level, Ms Kruger said.

Of the five sub-components, the employment sub-index increased the most, surging from 40.5 points in December 2018 to 48.3 points in January 2019, while the worst-performing sub-index was business activity (49.8 points).

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 people. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

Decrease In PPI For December 2018 Is Disappointing, Says SEIFSA

By | Featured, Press Releases | No Comments

Johannesburg, 31 January 2019 –  The latest data for the Producer Price Index (PPI) for intermediate manufactured goods is disappointing, indicating a further deterioration in selling price inflation in the Metals and Engineering (M&E) cluster of industries for December 2018, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said today.

The data, released by Statistics South Africa today, shows a slowdown in both the PPI for final manufactured goods and the PPI for intermediate manufactured goods from 6.8 percent in November 2018 to 5.2 percent in December 2018 and from 6.0 percent in November 2018 to 5.0 percent in December 2018, respectively.

Ms Kruger said the declining trend in PPI for intermediate manufactured goods is generally of concern to producers in the M&E cluster of industries since this PPI measures selling price inflation.

“Although declining prices are beneficial to those who buy the M&E sector’s products, the same cannot be said of businesses in the sector, which are struggling to improve on declining operational surpluses and profit margins,” Ms Kruger said.

Moreover, Ms Kruger said the decrease in the PPI for intermediate manufactured goods has the potential of reducing the existing positive differential between input cost inflation and selling price inflation.

She said it was necessary to maintain a positive differential between the selling price inflation and input cost inflation not only to sustain current businesses, but to also assist in creating new businesses in the medium to long term.

SEIFSA is a National Federation representing 23 independent employers 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
SEIFSA Money Graph

SEIFSA Welcomes Latest Inflation Easing

By | Featured, Press Releases | No Comments

Johannesburg, 23 January 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the easing of the Consumer Price Index (CPI) , with the numbers moving further away from the upper band of the South African Reserve Bank’s (SARB) inflation target.

According to Statistics South Africa (Stats SA) data, the annual consumer price inflation eased from 5.2 percent in November 2018 to 4.5 percent in December 2018. The month-on-month movement in the CPI was 0.2 percent.

Speaking after the release of the figures, SEIFSA Economist Marique Kruger said the slowdown in the prices of goods and services is a welcome relief for embattled domestic consumers who have been facing a number of headwinds, including tight credit conditions and the task of keeping their credit accounts in good standing.

“The lower CPI augurs well for over-indebted consumers as it will generally reduce pressure, thus enabling households to afford basic needs, while also enhancing their ability to service their debt obligations,” said Ms Kruger.

She added that increased spending against the backdrop of lower inflation generally augurs well for businesses in the manufacturing sector, including its Metals and Engineering (M&E) cluster of industries. This is the case especially given that demand for M&E intermediate products is usually driven by demand for final consumer goods produced.

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.
Employment Tax Incentive

SEIFSA Welcomes Reserve Bank’s Decision To Leave Interest Rates Unchanged

By | Featured, Press Releases | No Comments

Johannesburg, 17 January 2019 – The Steel and Engineering industries Federation of Southern Africa (SEIFSA) welcomes the South African Reserve Bank’s (SARB’s) decision to keep the repo rate unchanged at 6.75% and the prime rate at 10.25%, as it will further stimulate domestic demand and sustain the recent increase in real Gross Domestic Product (GDP) growth, SEIFSA Chief Economist Michael Ade said this afternoon.

The decision to keep rates unchanged comes against the backdrop of 2.2 % quarter-on-quarter increase in the real GDP during the third quarter of 2018, up from -0.4% during the second quarter of 2018.

“The announcement augurs well for businesses facing an increasingly constrained consumer demand, thereby invariably impacting negatively on their margins. Moreover, stability in interest rates not only provide some level of certainty to businesses, but also plays an imperative role toward reducing the cost of borrowing,” Dr Ade said.

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 companies to micro-enterprises employing fewer than 50 people.
A Third Consecutive Decrease

Persistent Rise in Inflation Is Worrying, Says SEIFSA

By | Featured, Latest News, Press Releases, Uncategorised | No Comments

Johannesburg, 12 December 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is disappointed by the latest Consumer Price Index (CPI) figures, which indicate that inflation increased further in November 2018, despite the  decision by the South African Reserve Bank to raise the repurchase rate by 25 basis point to 6,75% from 6,50% last month in an effort to  contain inflation within the mid-point of its 3-6 percent target band.

The CPI figures released by Statistics South Africa (StatsSA) today indicate that the annual consumer price inflation increased to 5.2 percent in November 2018, from 5.1 percent in October 2018. On a month-on-month basis, the CPI increased by 0.2 percent in November 2018.

SEIFSA Economist Marique Kruger said given that the demand for the Metals and Engineering (M&E) cluster’s intermediate products is a derived one based on consumer spending, the persistent rise in inflation is cause for concern.

However, Ms Kruger said the increase in the CPI was expected going into the festive season, underpinned by a seasonal pattern of higher consumer spending, galloping November fuel prices and a generally upward-trending Producer Price Index (PPI) for both the intermediate and final manufactured goods. The concern is that the increasing trend in inflation is likely to continue in the near term, compelling consumers to cut back on spending for final manufactured goods which warrant the use of intermediate manufactured products of the M&E cluster of industries as inputs.

“The latest inflation data is disappointing and does not augur well for businesses in the M&E cluster of industries and the broader manufacturing sector. The concern is that companies will continue to face headwinds, including higher interest rates, operational expenses and inflationary intermediate inputs costs,” Ms Kruger said.

In addition, she said it was worrying that the PPI data to be released tomorrow is likely to maintain its upward pressure on inflation.

SEIFSA closely monitors the release of both the CPI and PPI data for final and intermediate manufactured goods, amongst other indicators of its price and index pages (PIPS), due to their importance to the M&E sector. Both indices are used by companies in the secto in financial decision-making processes towards costs mitigation r through, for instance, Contract Price Adjustment processes.

In conclusion, Ms Kruger said despite the difficult operating environment, companies should capitalise on the prevailing signs of a silver lining to build on lower fuel prices for December and slowly improving domestic demand, reduce operational costs and positively boost margins and profit levels.

Issued by:

Ollie Madlala

Communications Manager

Tel: (011) 298 9411 / 082 602 1725

Email: ollie@seifsa.co.za

Web: www.seifsa.co.za

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 companies to micro-enterprises employing fewer than 50 people.

Improving M & E Production Is Encouraging, says SEIFSA

By | Featured, Latest News, Press Releases, Uncategorised | No Comments

Johannesburg, 11 December 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the preliminary production data for the Metals and Engineering (M&E) cluster of industries released by Statistics South Africa (Stats SA) today.

“The data, which reflects an increase in output for October 2018, augurs well for both the cluster and the broader manufacturing sector,” the Federation’s Chief Economist, Michael Ade, said this afternoon.

After adjusting for the sectoral weights, the preliminary seasonally-adjusted production data for the M&E sector indicated that output improved to 11,9 percent on a year-on-year basis in October 2018, when compared to October 2017. The improved performance is in line with an increase in production in the broader manufacturing sector, which also increased by 3,0 percent year-on-year in October 2018, following comparatively positive but lower output levels recorded in September 2018 and August 2018 respectively.

On a month-on-month basis, the M&E sector also performed well, improving from 0,3 percent in September 2018 to 9,3 percent in October 2018. The sector’s improved monthly performance was mainly supported by higher output in the petroleum, chemicals, rubber and plastic products (1,8 percent) and the basic iron and steel, non-ferrous metal products, metal products and machinery (1,7 percent) sub-industries.

“Against the backdrop of a slowly improving economy, the improvement in production for the cluster is encouraging. Evidently, producers were able to take advantage of a brief strengthening of the rand to capitalise on the importation of cheaper intermediary inputs, leading to the best increase in manufacturing production since the start of the year,” Dr Ade said.

He said the sector’s performance also coincides with an improved pace of the real Gross Domestic Product (GDP) growth, which surprised on the upside during the third quarter of 2018, officially moving the domestic economy out of a technical recession and providing impetus for more output, investment and employment.

Dr Ade said it is very important that the sub-components of the M&E cluster continue to expand, given the need to continuously improve on overall job numbers in the broader manufacturing, which is still a cause for concern. The latest Quarterly Employment Statistics numbers released by Stats SA earlier today shows that manufacturing employment decreased by 0,6% or 7,000 jobs quarter on quarter in June 2018 to September 2018, despite the sector’s positive contribution to GDP growth in the same quarter.

Dr Ade said this highlights the need to maintain the output growth momentum towards better employment numbers.

Dr Ade said that he hoped that the encouraging increase in domestic growth will translate to higher demand for intermediate and final manufactured goods, which will invariably have a positive impact on production and employment within the manufacturing sector. He noted that, importantly, businesses are optimistic that the recent slowdown in fuel prices will also have a positive impact on companies’ logistics costs in the short term, thus enabling an up-tick in business activity to the expansionary zone.

“These dynamics are encouraging and SEIFSA is optimistic that the basis for a continuous improvement in output going into the new year now exists for businesses to leverage on, and further expand,” Dr Ade concluded.

Ends

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.

 

 

SEIFSA Press Release Jar with coins

SEIFSA Welcomes SA’s Exit From Recession And Urges Businesses To Capitalise On Improving Demand In Order To Expand

By | EC Latest News, Featured, Press Releases | No Comments

Johannesburg, 4 December 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes South Africa’s official exit from a technical recession in the third quarter of 2018, and urges businesses to capitalise on improving local demand in order to expand.

South Africa’s real GDP increased by 2,2% in the third quarter of 2018, following a revised seasonally-adjusted 0,4% quarter-on-quarter (q/q) decrease recorded in quarter two of 2018. The broader manufacturing sector’s performance was equally encouraging, with the sector significantly contributing to growth in GDP in the third quarter.

Speaking after today’s release of GDP numbers, SEIFSA Chief Economist Michael Ade said the biggest concern often raised by stakeholders in the broader manufacturing sector as a stumbling block to expansion, profit and job creation is that of stagnant or poor demand. Dr Ade said although other documented constraints still prevail, the overriding challenge is that of lack of demand, with poor local demand often cited by businesses as the main reason for their increasingly turning to regional African and global markets for sales, despite the additional logistic costs involved.

“The improvement in GDP growth is, therefore, encouraging as it provides a platform for local businesses to be inward looking, against the backdrop of an improved demand for their intermediate and finished products,” Dr Ade said.

However, he warned that although South Africa has officially exited the recession, challenges still prevail. Although the improvement in growth signals a step in the right direction, the economy and businesses are still under duress characterised by high intermediate and operational costs, poor ratings from Fitch and S&P (which still rate South Africa’s debt at sub-investment grade or junk status), vulnerability to investor sentiments and poor business and consumer confidence.

He said much work still needs to be done to revive a stuttering South African economy and support industrial growth and expansion. For this to happen, Dr Ade said urgent intervention is needed to prevent the recent electricity blackouts from spiraling out of control as the ripple effect from load shedding will inevitably place businesses under duress, discourage investment and impact negatively on company output and economic growth. Accordingly, the Government needs to continue with identified reforms in beleaguered State-owned enterprises (SOEs), while also containing high debt levels.

“The SOEs and municipalities, through their designation for localisation imperatives, are important parts of a kaleidoscope of end-users which are very key to the survival of the manufacturing sector, including its diverse metals and engineering cluster of industries. Therefore, the SOEs and municipalities need to be in good shape in order to continuously sustain positive GDP growth projections and demand levels and boost expansion in industrial production,” Dr Ade said.

He added that the support of these institutions is important for continuous improvement in manufacturing, especially considering that manufacturing is amongst the sectors which contributed positively to the lift in third-quarter GDP growth momentum.

Dr Ade said although the manufacturing sector seems to be slowly regaining its influence, underpinned by repeated recording of positive monthly output figures since April 2018, it still needs more support.

Going into the new year, Dr Ade said some signs of green shoots which are necessary to kickstart the economy are evident for businesses to capitalise on and move to the next level of growth. He observed that the weak rand-to-dollar exchange rate which presented the biggest challenge to businesses in the manufacturing sector has strengthened, fuel prices have temporarily slowed (with a possible breather on logistic costs), and the PMI rebounded to 49,5 index points in November, representing the first increase after three consecutive months of declines and the best performance  since July 2018.

“Above all, domestic demand – which is the most important and sustainable driver of growth for the manufacturing sector, irrespective of Government incentives or protectionism – has improved and stakeholders are very hopeful,” he said.

In conclusion, Dr Ade said SEIFSA is also hopeful about constant improvement in GDP growth, but re-iterates the need for more swiftness in policy implementation and consistency in monitoring and evaluation of relevant interventions in order to maintain the positive growth trajectory.

SEIFSA is a National Federation representing 21 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.
Business Stability

SEIFSA Encouraged By Improvement In Broader Manufacturing Purchasing Managers’ Index

By | EC Latest News, Featured, Press Releases | No Comments

Johannesburg, 3 December 2018 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) welcomes the improvement in overall business activity in the broader manufacturing sector, as reflected in the ABSA Purchasing Managers’ Index (PMI) released today.

As a lead indicator and the first data point that is published for the preceding month, the PMI sets the tone for how manufacturers and various stakeholders in the broader manufacturing sector view the month ahead.

The headline PMI data released today improved from 42.4 percent in October 2018 to 49.5 percent in November 2018, placing the PMI data virtually on par with the 50-neutral level which separates expansion from contraction.

“The rebound in the data is encouraging. Despite low business and consumer confidence, it seems that manufacturing activity is generally improving, albeit rather slowly and still under pressure,” SEIFSA Economist Marique Kruger said.

She added that it was also encouraging to note that almost all the sub-indices improved in November 2018 vis-à-vis October 2018, with the new sales orders, inventories and suppliers’ performance trending in expansionary zones.

The only blip in the performance of the sub-indices was that of the employment sub-index, which still trends in the contractionary zone and seems to have taken a knock in November 2018 when compared to October 2018.

Ms Kruger said SEFSA remained hopeful that the increasing trend in the sub-indices would continue and eventually improve the composite seasonally-adjusted PMI for December 2018.

“Progression in the PMI is important towards boosting overall economic activity for quarter 4 of 2018, also enabling businesses to start the year 2019 on a positive note,” Ms Kruger concluded.

SEIFSA is a National Federation representing 21 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 companies to micro-enterprises employing fewer than 50 people.

Companies Unlikely To Benefit From Rising PPI For Intermediate Manufactured Goods Unless Inflation Eases Further, Says SEIFSA

By | EC Latest News, Featured, Press Releases | No Comments

Johannesburg, 29 November 2018 – Businesses in the metals and engineering (M&E) cluster are unlikely to benefit from a continuous increase in the selling price inflation in October 2018, given the current domestic economic environment underpinned by high petrol prices and an up-tick in both the prime interest rate and inflation, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.

Speaking after today’s release of Producer Price Index (PPI) figures by Statistics South Africa (StatsSA), SEIFSA Chief Economist Michael Ade said the latest release shows the annual percentage change in the PPI for final manufactured goods was 6,9% in October 2018, compared with 6,2% in September 2018. The data also shows a less-than- proportionate increase in the PPI for intermediate manufactured goods, considered a proxy for selling price inflation, from 7,7% in September 2018 to 7,4%. From September 2018 to October 2018, the PPI for intermediate manufactured goods increased by 1,0%.

However, Dr Ade said it is worrisome to note that notwithstanding the improving trend in selling price inflation for intermediate manufactured goods, companies are still constrained by derived logistics costs from high fuel prices and the double whammy of rising prices and higher prime interest rate.

“As captured by recent official releases from StatsSA and the South African Reserve Bank, the headline CPI correspondingly increased from 4,9% in September 2018 to 5,1% in October 2018, alongside the interest rate which increased from 6,5% in September to 6,75% in October. These dynamics definitely have the potential of compounding the dire situation of most businesses. The bigger concern is the direct impact on the depleting margins of companies, with dreadful extended socio-economic consequences on the broader economy,” Dr Ade said.

He said the direct transmission effects of the negative shocks arising from inflation, high costs of servicing existing loans and from snowballing borrowing costs from the financial service providers will impact negatively on consumer demand, thereby reducing the ability of producers to increase selling prices.

Dr Ade said that given that most of the intermediate goods produced in the M&E cluster are further utilised in the production of final manufactured goods which are largely consumed by domestic consumers, the reverse knock-on effect on the M&E cluster will be huge. He said the sharp deterioration in both the consumer and business confidence indices, as captured by the FNB/BER confidence indices, was equally of concern. .

The data reflect consumer confidence dipping from 22 in the second quarter to 7 in the third quarter of the year, while business confidence also fell from 40 in the second quarter to 34 in the third quarter. The bleak picture is further corroborated by the poor performance of the Absa business expectation index, which slowed down from 45,8 in September to 41,7 in October, in the midst of a technical recession and low domestic demand.

Dr Ade said that the lack of demand will invariably affect the speed with which intermediate manufactured goods leave the factories, steel mills, foundries, smelters and warehouses.

“Also, given the direct correlation that exists between changes in the PPI at the retail level (finished goods) and consumers at the point of sale, increases in both inflation and the cost of borrowing will adversely affect the speed at which manufactured goods are sold. Given these constraints, businesses are unlikely to benefit from prevailing increasing selling price inflation as it becomes difficult to pass price increases on to the final consumers continuously,” Dr Ade said.

In conclusion, Dr Ade pointed out that the PPI for the final and intermediate manufactured goods are important drivers of consumer demand. He said both indicators also generally act as a preview of changes in the rate of inflation.

Dr Ade cautioned that, in analysing both trends, businesses should also give significant consideration to other drivers of consumer spending.

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 companies to micro-enterprises employing fewer than 50 people.
[i]
[i]
[i]
[i]