Not only was January production lower than January 2014, but the sector contracted by 3,3% on an annual basis.
Speaking after the release of the manufacturing production figures, SEIFSA Chief Economist Henk Langenhoven said that the only flicker of light was that January production was slightly higher (0,7% seasonally-adjusted) than that in December.
“But, this was mainly due to recovery in the basic iron and steel (4,9%), and household appliances industries (17,8%) together having a 24% weight in the overall index for metals and engineering,” Mr Langenhoven said.
The recovery in the basic iron and steel industry was mainly due to one of the large producers bringing their plant up to normal capacity after a long period of maintenance during the second half of 2014. The latter is therefore not an indication of true recovery.
Mr Langenhoven said that this was indeed a sad state of affairs; most of the other industries making up the metals and engineering sector contracted by much more than the overall performance indicated on a 12 month seasonally-adjusted basis;
- Rubber products -8,9%,
- Plastics -4,2%,
- Non-ferrous -5,1%,
- Structural steel -8,2%,
- General purpose machinery -11,9%,
- Special purpose machinery -3,6%
- Electrical machinery and equipment -1,2%
SEIFSA earlier stated that it did not foresee any growth for the sector during 2015. The statement by the Minister of Finance during his budget speech that only low-import and electricity-light sectors would be supported by government over the medium-term seems to be a serious point of departure for policy for the foreseeable future.
Mr Langenhoven said that with domestic economic uncertainties, the balance of payments and budget deficits as well as the renewed strength of the dollar, it seemed as if a weakening currency may indeed hold the only hope for better export earnings from the sector if sufficient electricity was available to produce the products.
“It seems as if the sector finds itself at the centre of contradictory forces, policy choices and constraints, a difficult position, indeed.” Mr Langenhoven concluded.