JOHANNESBURG, 18 MARCH 2021 – The uptick in sales of construction and building materials, amid increased construction activity, is encouraging and bodes well for the Metals and Engineering (M&E) sector, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA), said today.
SEIFSA Chief Economist Chifipa Mhango said the increase in the sale of construction and building material was mainly driven by the steady easing of lockdown restrictions, which led to an increase in demand of building supplies such as steel, cement and bricks, among others. However, Mr Mhango expressed concern about the accompanying decline in wholesale trade sales.
Wholesale trade sales data released by Statistics South Africa (StatsSA) today showed a sales decline of 7.1% in January, compared to January 2020. Month-on-month wholesale trade sales decreased by 0.6% in January, when compared with December 2020. However, sales of construction and building materials increased from R8.9 billion in December 2020 to R10.5 billion in January 2021, with expansionary year-on-year growth of 45.1 percent in January 2021.
Mr Mhango said the increase in the sale of construction and building material was positive news for the M&E sector. He said this improvement was attributed to the increase in construction activity, which followed the relaxation of COVID-19 lockdown regulations, as more workers returned to work. He said it coincided with a welcome increase in M&E production sales, which improved significantly from R58 billion in December 2020 to R63 billion in January 2021.
“As the economy opens up and more COVID-19 vaccines are rolled out, we anticipate further green shoots in the sale of construction building materials. The rolling out of key Government infrastructure projects to the total value of R791.2 billion in public sector spending into the next three fiscal years is also good news to the M&E sector, as we expect demand for construction and building materials to improve further,” Mr Mhango said.