SEIFSA

Johannesburg, 25 June 2019 – The Steel and Engineering Industries Federation of Southern African (SEIFSA) is encouraged by the Quarterly Employment Statistics (QES) data, reflecting an increase in the number of people formally employed in South Africa, Economist Marique Kruger said today.

According to the data released by Statistics South Africa this morning, formal employment in the local economy increased from 10 152 000 in December 2018 to 10 174 000 in March 2019, an increase of 22 000 jobs
quarter on quarter. The largest contributor to the quarterly increase in job numbers was the community services sector, gaining 19 000 jobs in March 2019. Furthermore, there were increases in job numbers in the mining and quarrying sector (6 000 jobs), the manufacturing sector (5 000) and the business services sector (5 000 jobs).

An analysis of the preliminary estimates indicates that the broader manufacturing sector, of which the metals and engineering (M&E) cluster of industries forms an integral part, gained 0.4 percent of total employment (5 000 jobs) in the first quarter of 2019, with employment increasing from 1 222 000 in December 2018 to 1 227 000 in March 2019. Over a longer time frame, between the first quarter of 2018 and the first quarter of 2019, an encouraging total of 9 000 jobs were gained in the manufacturing sector, an increase of 0.7 percent.

“However, the concern is that the increase in formal employment numbers is unsustainable, as underlying industry dynamics and contribution to GDP are deteriorating,” Ms Kruger cautioned.

She said that businesses are under duress, mainly rowing against high tides and headwinds comprising a plethora of challenges, including increasing intermediate input costs, a volatile exchange rate, comparatively high fuel prices, operational costs and the new carbon tax. These constraints leave companies with little room to pass cost increases on to the market, compelling them to lay off workers in order to cut operational costs in the medium to long term.

“Given the prevailing difficulties, it is, therefore, important for captains of industry and policy makers to engage continuously and seek sustainable solutions aimed at addressing the existing challenges which, if ignored, may reverse the gains made and compound the scourge of unemployment,” Ms Kruger concluded.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

Johannesburg, 25 June 2019 – Although the performance of the metals and engineering (M&E) sector during the first quarter of 2019 was disappointing, recovery underpinned by stronger regional and international demand appears to be on the horizon, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said this morning.

SEIFSA Chief Economist Michael Ade said although the optimism SEIFSA had anticipated at the beginning of 2019 had waned against the backdrop of the constriction of the sector, which saw its output dropping during the first quarter of 2019 when compared to the first quarter of 2018, the Federation nevertheless remains optimistic that the external environment holds a great deal of potential for the sector’s exports and ultimate recovery.

“The sector’s recovery will be driven by stronger regional demand from the SADC region and the rest of Africa, underpinned by the newly-launched African Continental Free Trade Area, and globally from Europe, Asia and the Americas. In addition, the slowly-improving international commodity prices will also provide a strong basis for the M&E cluster to improve on output,” Dr Ade said.

Dr Ade attributed the sector’s contraction during the first quarter to continued softening of global economic activity, with trade and manufacturing showing signs of marked weakness against the backdrop of heightened trade battles driven by geopolitical dynamics.

Locally, the sector’s growth was choked by a weak domestic environment and load shedding, which also negatively impacted on the growth rate of the mining, transport, electricity, trade and construction sectors.

Despite of the challenging start to 2019, Dr Ade said there is hope that the sector will ultimately recover, albeit at a slower pace and a lower rate than usually forecast.

“Internationally there has been heightened policy uncertainty, including a recent re-escalation of trade tensions between major economies, accompanied by a deceleration in global investments and a decline in confidence, which in turn weighed on the local currency, dragging down emerging markets as capital flows from investors move to the safety of the US dollar in expectation of better returns. Undoubtedly, the downside to the production growth in the M&E sector will be tempered by a generally difficult operating environment, but the expectation is for the comparatively weaker exchange rate to provide leverage over time and perk up export volumes through relatively lower prices, also impacting on production,” he said.

Commenting on the domestic operating environment, Dr Ade said despite the prognosis being less robust, primarily as a result of slowly-improving but volatile supply-side dynamics underpinned by regressing business and consumer confidence, SEIFSA remains positive about the sector’s long-term outlook against the backdrop of the decision by Moody’s to keep South Africa’s investment rating above sub-investment grade.

Although the decision by Moody’s augers well for existing and new investments, Dr Ade cautions that the positive outlook depends on continuous policy reforms and initiatives aimed at promoting real gross fixed capital formation (GFCF) from the general government, public corporations and private business enterprises.

Dr Ade said this was important, given the dismal performance of GFCF in Q1 2019, decreasing by 4.5 percent, its fifth consecutive decline from Q1 2018.

Dr Ade said notwithstanding the decline in real GDP in quarter 1 of 2019, there was a corresponding net growth in production in the broader manufacturing sector, with preliminary data showing the sector cumulatively growing by 2.5 percent, despite the dismal performance of its M&E sub-sectors comprising roughly 45 percent.

“Although the expectation is for the M&E sector to rebound and improve during the course of the year, we are cognisant of the difficult operating environment, hence the moderate forecast of 1.6 percent growth for 2019,” Dr Ade said.

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people

Johannesburg, 19 June 2019 – The uptick in consumer price index figures for May 2019 amid low growth is discouraging for consumers and businesses and may negatively affect  consumer sentiments and spending, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Chief Economist Michael Ade said this morning.

According to the latest data released by Statistics South Africa today, the annual headline consumer price inflation increased from 4.4 percent in April 2019 to 4.5 percent in May 2019, while the core CPI remained unchanged at 4.1 percent in May 2019. On a month-on-month basis, the headline CPI was 0.3 percent in May 2019.

“This is discouraging for over-indebted consumers who are clearly struggling to cope, as reflected by the dip in final consumption expenditure in Q1 2019, decreasing by 0.8%,” Dr Ade said.

He added that given the low-growth context, the general increase in the prices of goods and services does not augur well for embattled domestic consumers and the South African households in general as higher CPI numbers increase the nominal prices of goods and services, also impacting negatively on over-indebted consumers’ household budgets and reducing the ability to service existing debts or to make extra payments.

Dr Ade said companies in the broader manufacturing sector, including its heterogenous metals and engineering sector, will also not benefit from higher inflation due to a possible decrease in the demand for intermediate and final manufactured goods.

“However, we sound a caveat against reading too much into the current data, which does not constitute a trend, given its high level of volatility. This is because changes in factors affecting supply, including high-frequency data, may also negatively impact on the CPI numbers as businesses pass on cost increases into the market,” Dr Ade concluded.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people

Johannesburg, 4 June 2019 – The 3,2% drop in South Africa’s Gross Domestic Product (GDP) in the first quarter of 2019 demonstrates, much more than anything else, that the country needs more than the now-routine lip service paid by the country’s political leadership to economic growth and the euphoria which greeted Cyril Ramaphosa’s ascendancy to the presidency last year, SEIFSA Chief Executive Officer Kaizer Nyatsumba said today.

Mr Nyatsumba said this major drop – the largest in a decade – is concrete evidence, if any were needed, that merely talking about a new dawn without having the courage to tackle the country’s myriad challenges would not suffice.

“This terrible news shows that the tremendous amount of goodwill that greeted President Ramaphosa when he assumed the country’s interim presidency last year – and came to be known as ‘ramaphoria’ – may have been misplaced. It is clear that we were so punch-drunk from the terrible leadership offered by President Jacob Zuma that we got carried away as a country and assumed that that ugly past was behind us.

“Regrettably, however, it has been during the Ramaphosa presidency that South Africa experienced a recession last year, and now comes the depressing news that our economy has shrunk by its biggest margin since 2009. We have previously been told about an economic stimulus to reinvigorate the economy, but no evidence of that has been seen so far,” Mr Nyatsumba said.

He said that the situation called for bold leadership from President Ramaphosa and his Government, and not just mere soothing words, and required that tough decisions were taken speedily to reverse the malaise confronting the country.

“President Ramaphosa has now obtained a mandate from the electorate; he and his team can no longer continue to fiddle while the country burns. We are currently confronting a growing economic crisis, which has the potential to get completely out of control. Tough leadership, as opposed to tepid leadership and mere rhetoric, is called for,” he said.

Mr Nyatsumba said it was deeply regrettable that, instead of being engines for growth, South Africa’s State-owned companies like Eskom and South African Airways – whose CEOs were forced by circumstances beyond their control to step down within days of each other – were allowed to teeter dangerously on the brink of collapse simply because “our political leadership does not have the courage to do what needs to be done”.

Mr Nyatsumba said SEIFSA would be seeking an urgent meeting with Trade and Economic Development Minister Ebrahim Patel and his colleagues within the economic cluster of Ministers to discuss the concerns of the metals and engineering sector, which is a vital part of manufacturing.

Meanwhile, SEIFSA Economist Marique Kruger said the decline in the GDP is disconcerting to businesses that continue to face headwinds amid spiraling operational expenses and rising intermediate input costs underpinned by high petrol prices and electricity costs.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

Johannesburg, 3 June 2019 – A dip in overall business activity in the broader manufacturing sector is disappointing and the result of the lead indicator for May 2019 does not bode well for future activity of companies in the broader manufacturing sector, so said Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger.

The ABSA Purchasing Managers’ Index (PMI) decreased from 47.2 points in April 2019 to 45.4 points in May 2019, providing discouraging forward-looking insight into the manufacturing sector’s health, while still trending below the benchmark level of 50, which separates expansion from contraction.

Speaking after the release of the data this morning, Ms Kruger said the headline PMI and its five main sub-indices play an important role in businesses’ decision-making processes.

“The deterioration in the headline PMI is underpinned by decreases in the business activity and new sales orders sub-indices, with the business activity, new sales orders, inventory and employment sub-indices trending below the neutral 50-point mark in May 2019. However, the supplier performance sub-index was the best performer, increasing to 55.7 points in May 2019,” Ms Kruger said.

She said generally the information on all sub-indices highlights volatility in the trend, which is worrying to the broader manufacturing sector. She said SEIFSA, which is disappointed with the decrease in the data, hopes for an improvement in business activity in the short term.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.

JOHANNESBURG, 26 MAY 2019 – While the Steel and Engineering Industries Federation of Southern African (SEIFSA) welcomes the reduced Cabinet appointed by President Cyril Ramaphosa this evening and pledges to work with the Government to grow the country’s economy, nevertheless the Federation remains concerned about the size of the Cabinet and the plethora of Deputy Ministers.

SEIFSA Chief Executive Officer Kaizer Nyatsumba said while it was commendable  that President Ramaphosa had honoured his undertaking to reduce the size of the Cabinet, he had not gone far enough, with the 28-member Cabinet still being among the largest in the democratic world. Mr Nyatsumba said a South Africa going through tough times would have been better off with a Cabinet of between 20 and 25 Ministers, considering the various internal interests that President Ramaphosa had to satisfy.

Mr Nyatsumba pointed out that far wealthier, First-World countries had Cabinets much smaller than our own.

“It is evident that President Ramaphosa came under immense pressure to satisfy so many disparate interests within the ANC-led tripartite alliance. That explains the continuing bloated nature of our Cabinet and the many Deputy Ministers. Regrettably, some of these appointments are more about managing internal tensions within the governing party, and less about what is in the country’s best interests,” Mr Nyatsumba said.

Mr Nyatsumba welcomed the  retention of Tito Mboweni as Finance Minister and the return to one, all-encompassing Ministry of Trade and Industry, which he hoped would look after the interests of all of business, regardless of size. He expressed the hope that new Trade and Industry Minister Ebrahim Patel would be much more accessible to business and strongly champion its cause within the Cabinet.

“Among our many problems as a country, our biggest by far is the poor performance of our economy. Inevitably, this leads to an ever-growing army of the unemployed and higher levels of poverty. By and large, that has been the consequence of the terrible quality of leadership to which South Africa has been subjected in the past decade, coupled with runaway corruption which came dangerously close to being the norm mostly in government and the public sector.

“Therefore, we welcome the generally good quality of leaders appointed by President Ramaphosa into his Cabinet. We believe that most of them are men and women of integrity who will put the country’s interests ahead of the narrow, selfish interests of either their political party or any other group.

“Like many others, we believe in President Ramaphosa and wish him and his Government well. We stand ready to partner with them to grow the economy.

“However, while we will pay attention to their words, we will watch their actions even more carefully and criticize them where we feel that they are letting the country down,” Mr Nyatsumba said.

He called on the Government to redouble its efforts to tackle corruption head on and to ensure that all those who are alleged to have been involved in any form of corruption or malfeasance are prosecuted without fear or favour, with all tiers of government, the general public sector and State-owned companies being the starting point.

Mr Nyatsumba stressed the need for South Africa to be made an attractive foreign and domestic investment destination in order to grow the economy and to create much-needed jobs to reduce the high level of unemployment, which poses a serious risk to the country’s future.

“The Government must realize that South Africa is not owed any favours by anybody around the world. The country must compete, against many others, for foreign investment. The Government has the onerous responsibility of creating a conducive climate for investment. That includes ensuring that there is a merciless crackdown on all forms of crime, especially violent crime,” Mr Nyatsumba said.

He added that in SEIFSA – which actively champions transformation within the metals and engineering sector – President Ramaphosa and his Government will find a reliable partner, “provided they put the country’s interests first”.

SEIFSA is a National Federation representing 23 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people