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Press Release – 2014/07/10: STRIKE LIKELY TO WORSEN PERFOMANCE OF THE AILING METALS AND ENGINEERING SECTOR

By 9th Jul 2014 Sep 20th, 2019 No Comments

Data for May show a complete collapse of -7% in production, and is mainly to blame for the 12-month growth performance dropping to 2%, down from 3,5% at the end of April.
SEIFSA Chief Economist Henk Langenhoven warned that “the worst is yet to come”.

He said that the latest piece of bad news comes on the heels of the June Kagiso Puchasing Managers’ Index business activity index released earlier, which indicated a further strong deterioration in business confidence since the beginning of the year. That, he said, was a trend which started in the third quarter of 2013.

Mr Langenhoven said that while production levels had held up until April, mainly due to pre-emptive stock building in anticipation of the current metals and engineering strike and a possible earlier resolution of the platinum mining strike, these drivers had since waned.

“The sector strike has materialised, the mining recovery will be slow due to the strike’s duration and construction shows no signs of revival,” said Mr Langenhoven.
He said that the collapse in production was severe, with May levels 4% lower than April, and May 2014 nearly 7% lower than the same month last year.

Mr Langenhoven said that:

  • only basic iron and steel, other fabricated metal products and household appliances showed growth between January and May, with all other sub- industries contracting when compared to the same period last year;
  • on a twelve-month basis the overall production recorded 2% growth mainly due to the heavily-weighted basic iron and steel, together with non-ferrous, other fabricated metals and household appliances.

Mr Langenhoven said that there was “a real danger” that the metals and engineering strike now in its second week could “break the camel’s back”. The strike comes on top of negative sector profit margins over the last three years, with low capacity utilisation, as well as an increased influx of imported goods replacing South African products.

“South Africa cannot afford the current vicious declining spiral impacting the auto, mining and construction sectors and the overall economy,” Mr Langenhoven said.

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