Johannesburg, 11 April 2019 – Preliminary data released by Statistics South Africa (Stats SA) today – which shows a reduction in manufacturing production – is disappointing, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said. SEIFSA Chief Economist Michael Ade said the data, which reflects a decrease in output for February 2019, does not augur well for both the Metals and Engineering (M&E) cluster of industries and the broader manufacturing sector.
The latest preliminary data published by Stats SA indicated that production in the broader manufacturing decreased on a year-on-year basis in February 2019, when compared with January 2019. On a continuous three-monthly basis, output in the manufacturing sector has been volatile, increasing from 0.0 percent in December 2018 to 0.9 percent in January 2019, thereafter slowing to 0.6 percent in February 2019. The monthly data reflects a high level of volatility.
“The deceleration in output does not augur well for businesses in the manufacturing sector, including the M&E cluster which continuously faces headwinds underpinned by low domestic demand, unpredictable energy supply and high petrol prices. These all add to the increasing logistics costs of companies. A positive performance is imperative towards improving the real Gross Domestic Product of the domestic economy for the first quarter of 2019,” said Dr Ade.
However, in spite of the difficult operational environment, Dr Ade said SEIFSA remains confident that companies within the M&E cluster will stay resilient and navigate the challenges posed by a spluttering economy.