Manufacturing sector continues to underperform

Johannesburg – Manufacturing production was up 0.8% in January 2017, but this is still below levels of productions recorded before the global financial market crisis, according to Statistics South Africa which released data on manufacturing production on Tuesday.

The contributors to growth were basic iron and steel, non-ferrous metal products, metal products and machinery, up 3.5%. Petroleum, chemicals, rubber and plastic products were up 1.7% and furniture and “other” manufacturing was up 21.6%.

However, manufacturing production declined 0.4% for the three months leading up to January 2017. Among the negative contributors for the quarter were petroleum, chemical products, rubber and plastic products, down 1.3%. Motor vehicles, parts and accessories and other transport equipment was down 3.4%. Food and beverages shed 0.6%. Wood and wood products, paper, publishing and printing also came down 1.2%.

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Essentially nine out of 10 units of the manufacturing sector declined or made no contribution to the overall performance of the sector. Stanlib chief economist Kevin Lings said the declining growth in the sector shows it continues to drag down the overall performance of the economy.

Compared to 2010, manufacturing activity grew 4.7% year-on-year, an improvement from the 13.5% decline reported in 2009, said Lings. In 2011, the sector experienced significant disruptions due to strikes and rose by 2.8%. In 2012, growth averaged 2.3%, given a weaker global economy and extensive mining strikes, said Lings.

During 2014, the sector was impacted by electricity outages, and only increased 0.2%. The year 2015 saw the sector decline 0.04% - the “worst annual performance” since the recession in 2009.

“Clearly South Africa’s manufacturing sector is still struggling to gain any meaningful traction,” said Lings. Improved agricultural production and mining production could help improve manufacturing production in the next few months, said Lings.

The manufacturing industry was one of the contributors to negative economic growth in 2016, according to Stats SA.

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In 2016, manufacturing decreased by 3.1%. This was brought on by a decline in manufacturing of food and beverages, petroleum, chemical products, rubber and plastic products as well as motor vehicles, parts and accessories of transport equipment, Fin24 reported.