SEIFSA IS WORRIED BY THE ANNOUNCEMENT OF THE U.S DEPARTMENT OF COMMERCE IN ITS ANTIDUMPING DUTY INVESTIGATIONS OF IMPORTS OF CARBON AND ALLOY STEEL WIRE ROD FROM SOUTH AFRICA
Johannesburg, 8 February 2018 – The latest preliminary production data for the metals and engineering (M&E) sector, released by Statistics South Africa (StatsSA) this afternoon, reflect a slowdown in production in December 2017, despite a 2% increase in the broader manufacturing production during the same period, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said today.
The preliminary StatsSA data revealed that production in the M&E sector decelerated to 19.3 % in December 2017 on a month-on-month basis, when compared to the 1.0% recorded in November 2017. Ms Kruger said the enhanced volatility in the data was partly accounted for by the seasonal effect.
Ms Kruger said notwithstanding a favourable global growth outlook, “constrained domestic conditions” did not help in sustaining the upswing in the M&E sector production recorded in November 2017.
The poor month-to-month performance of the M&E sector in December 2017 is inconsistent with the general growth in the annual production recorded by the entire M&E sector for the full year 2017. Companies in the sector have yet to benefit from the improved annual production recorded last year as challenges prevalent to the sector still remain. Some of these include under-utilisation of capacity, high unit labour costs and low productivity levels, which negatively impact on margins and net operating surplus levels,” Ms Kruger said.
She added that the performance of key economic indicators for the M&E sector – such as the Producer Price Index (PPI) for intermediate manufactured goods and the Purchasing Managers Index (PMI) – were also crucial in bolstering margins and supporting further growth prospects in the sector.
On average, the PPI for intermediate manufactured goods decreased from 6,8% in 2016 to 4.0% in 2017, while the average PMI decreased from 49.1 in 2016 to 47.4 in 2017. Ms Kruger said while falling prices were beneficial to buyers of the M&E sector’s products, the same could not be said about the businesses in the sector which were concerned about declining profit margins.
She said the Federation will continue to track the M&E production data and was optimistic that the January 2018 metals and engineering production number would rebound.
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