Auto strike hits factory output

Manufacturing output fell in August as strikes hit car production, pointing to sluggish growth in the third quarter.

Manufacturing shrank by 3.6% in volume terms in August compared with the previous month and grew by only 0.2% on a year-on-year basis, Statistics SA data showed.

This undershot even economists' pessimistic forecasts of 0.55% year-on-year growth.

It was underpinned by a 29% slide in output from the vehicles, parts and accessories sector, which translated into a 25% year-on-year drop.

Carmaker BMW said this week the "inherently unstable" labour situation had forced it to freeze expansion plans.

Strikes have also hit mining, which contributes about 5% to GDP but only managed 2.1% year-on-year output growth in August.

The latest data all points to weak third-quarter growth, which has languished below an annual expansion rate of 3% since coming out of recession in 2009.

Economists have said a long-standing governing alliance between the ANC and unions has led to labour-friendly legislation, which has made the jobs market overly rigid and is eroding the country's competitive edge.

Since 2000, real, after-inflation wages have risen by 53%, while productivity has fallen by 41%, according to government data.