Positive trend in manufacturing sector production is encouraging, says SEIFSA

POSITIVE TREND IN MANUFACTURING SECTOR PRODUCTION IS ENCOURAGING, SAYS SEIFSA

JOHANNESBURG, 11 MAY 2021 – The year-on-year improvement in manufacturing production in March 2021 is encouraging even though production in March 2020 was negatively affected by lockdown restrictions put in place to curb the spread of COVID-19, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today. 

According to manufacturing data released by Statistics SA (StatsSA), total manufacturing production increased by 4.6% in year on year in March 2021, while also increasing by 3.4% from February 2021. Total manufacturing sales increased by 17.8% year on year in March 2021 and 5.9% from February 2021. Year to date, production declined by 0.5%, with sales improving by 7.4%.

Within the Metals and Engineering (M&E) sub-sector of the manufacturing sector, which accounts for 29% of total manufacturing production, the 13 sub-categories saw a production increase of an average of 5.5% in March 2021 year on year. Total sales increased by 18.8% to reach R87.8-billion in March 2021, with the largest sales value being in the non-ferrous metal products at R23.7-billion.

SEIFSA Chief Economist Chifipa Mhango said the figures bode well for the M&E industry as they signal a return, albeit slow, return to normal economic activity. “When you look at these figures in conjunction with recently released capacity utilisation data of 74% in the manufacturing sector for the first quarter of 2021, it can be surmised that there is more room for increased activity and hence production,” he said, adding that SEIFSA is hopeful of a sustained improvement in manufacturing production, particularly given that Absa’s Purchasing Managers Index data also indicates an expansionary trajectory.

Mr Mhango said, however, that any sustained improvement in the manufacturing sector, and M&E industry in particular, will depend on the Government’s efforts to revive the economy.

He said the current state of the M&E sector is that of a declining level of employment as well as investment, with a weak trade position with the rest of the world. With total national unemployment rate at 32.5%, South Africa’s industrial base needs to be supported through massive improvement in fixed investment. “To support the growth momentum we are seeing in manufacturing production, the Government will need to speed up the implementation of the Steel Master Plan to the benefit of the local M&E industry, both primary and downstream, and ensure that State entities adhere to localisation procurement rules in public infrastructure spending,” Mr Mhango said.

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