The data for the latter month declined by 18, 5% on June 2014, while the July 2015 figure improved by 17,1% on July 2014.

SEIFSA Chief Economist Henk Langenhoven said that the year to date (January to July) production data show a slight decline when compared to the same period last year.

“Therefore, 2015 has so far been marginally worse than the turbulent first seven months of last year. When the 12 months ending in July 2015 are compared to the same period last year, a 1,1% contraction is still evident. This shows the weakness in the sector,” Mr Langenhoven said.

He added that forward-looking confidence indicators were pointing in different directions:

  • If the Bureau for Economic Research’s (BER) third quarter manufacturing survey data are anything to go by, confidence in manufacturing has improved slightly for the third quarter, but expected business conditions in 12 months have deteriorated;
  • The all-important monthly business activity sub-index of the purchasing managers’ index has declined in August, again showing fragility and volatile expectations changing from one period to the next;
  • The above is supported by the BER’s overall business confidence index, which showed that sales of intermediary goods (chemicals, basic metals and metal products) as well as capital goods (transport and machinery and equipment) contracted in the third quarter – as a result, August and September production numbers are expected to move sideways or contract again.

Comparing the July 2015 production numbers with those for July 2014 for the subindustries in the sector shows “wild improvements” (ranging from 2,1% to 56%).

However, comparing July with June this year shows contraction in non-ferrous metals (- 5,7%), other fabricated metals (-3,8%), general machinery (-0,7%) and household appliances (-5,5%).

Mr Langenhoven said that over a 12-month, seasonally-adjusted period, which is the best way to make sense of the latest data, the component industries achieved as follows:

  • Electrical machinery and equipment – 3,2%;
  • Special Machinery – 2,9%;
  • Basic iron and steel – 1,8%;
  • Other fabricated metal products – 0,8%;
  • Rubber – -1,5%;
  • Household appliances – – 2,1%;
  • Plastics – 2,1%;
  • General purpose machinery – -5,2%;
  • Structural steel – -5,7%;
  • Non-ferrous metals – -6%;
  • Rubber products – -6,2%.

“The question remains of how much longer this will continue. The metals and engineering sector depends on the international market in the form of exports, mining, the auto sector and construction as its biggest markets,” Mr Langenhoven said.

Later data sources than those mentioned above indicate that the confidence for both export and domestic sales orders is declining. Mining production numbers for June, released earlier, showed a 4% improvement on a year ago, but the month of June was only 1,1% better than May 2015. Annualised and seasonally-adjusted three months’ data show contraction (-2%).

Mr Langenhoven said that the only thing that could be said with certainty was that “the outcome for the sector is very uncertain.”