Slowdown in selling price inflation for intermediate manufacatured goods does not augur well for M&E producers
This article has been supplied.
The consistent slowdown in the Producer Price Index (PPI) for intermediate manufactured goods does not augur well for companies operating in the metals and engineering (M&E) sector, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist, Marique Kruger, said today.
The Statistics South Africa (Stats SA) data released this morning shows that the annual percentage change in the PPI for intermediate manufactured goods (which serves as a proxy for selling price inflation of companies in the M&E cluster of industries) slowed to 1.7 percent in July 2019, from 4.5 percent in June 2019. The main drivers of the dip in selling prices to the annual rate of 1.7 percent were basic and fabricated metal products, as companies generally struggle to improve capacity utilisation. Similarly, the PPI for final manufactured goods for the broader manufacturing sector also registered a decrease, slowing from 5.8 percent in June 2019 to 4.9 percent in July 2019.
Speaking after the release of the data, Ms Kruger said the underlying driver of volatility in the PPI continues to be a weaker exchange rate, which increased companies’ costs of imported inputs, underpinned by tough business conditions. Moreover, non-descript levels of domestic demand and rising intermediate input costs, compounded by increasing energy and fuel prices, have made it difficult for domestic producers to move stock out of their warehouses.
Given the current challenging economic environment, Ms Kruger said the further slowdown in selling price inflation is disappointing, given the detrimental impacts to businesses in the M&E sector, which are already struggling to improve on declining operational surpluses and profit margins.
“The decreasing trend in the PPI for intermediate manufactured goods, therefore, does not augur well for producers in the M&E cluster, who have less lee-way to pass on cost increases onto the market,” Ms Kruger said.
Comments
Research Reports
Projects
Latest News
Showroom
ESAB South Arica, the leading supplier of high-end welding and cutting products to the Southern African industrial market is based in...
VISIT SHOWROOM
Weir is a global leader in mining technology. We recognise that our planet’s future depends on the transition to renewable energy, and that...
VISIT SHOWROOM
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
