Despite ending the year better than expected, South Africa’s manufacturing production prospects for 2016 remained “dim”, stated BNP Paribas securities economist Jeffrey Schultz on Thursday.

Manufacturing production ticked up 0.4% year-on-year in December 2015, outperforming previous forecasts of a 1.5% contraction.

The largest positive contributions were made by the food and beverages sector, which grew by 4.4% and contributed 1.4 percentage points, as well as petroleum, chemicals, rubber and plastic products, which increased by 2.1%, contributing 0.5 of a percentage point, revealed Statistics South Africa (Stats SA) on Thursday.

The most significant negative contribution was made by basic iron and steel, nonferrous metal products, metal products and machinery, with a -6.2% contraction, contributing -1.1 percentage points.

“In 2015, total manufacturing production showed no growth compared with 2014,” noted Stats SA, adding that the largest contributions for that year were made by the food and beverages sector (2.7% and contributing 0.7 of a percentage point) and the basic iron and steel, nonferrous metal products, metal products and machinery sector (-3.3% and contributing -0.6 of a percentage point).

December’s seasonally adjusted manufacturing production increased by 1.8% month-on-month, following month-on-month changes of -1.3% and -1.8% in November and October respectively.

However, Schultz commented that, on a quarterly seasonally adjusted and annualised basis, the manufacturing sector slipped back into contraction in the fourth quarter, falling 2.1% after registering positive growth of 5.5% in the third quarter.

“This does not bode particularly well for fourth-quarter production-side gross domestic product (GDP) growth figures, given the manufacturing industry’s more than 13% contribution to the country’s gross value added,” he said.

“Though we welcome the December upside surprise in manufacturing production growth, underlying growth momentum remains poor and will be reflected in the sector’s negative contribution to fourth-quarter GDP growth,” he said.