JOHANNESBURG – The continued improvement in manufacturing sector production and sales data is an indication of sporadic signs of economic recovery from the impact of COVID-19 lockdowns, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said today.
According to manufacturing data released by Statistics South Africa (StatsSA), total manufacturing production improved to 35.3% year on year in May 2021, when compared to May 2020, despite a month-on-month decline of 2.6%. Total manufacturing sales increased by 53.3% year on year in May 2021 and while declining by 0.1% from April 2021. Year to date, manufacturing production has increased by 17%, with sales improving by 29%.
Within the Metals and Engineering (M&E) sub-sectors of the manufacturing sector, which accounts for 29% of total manufacturing production, total production across the 13 sub-categories increased by an average of 69.8% in May 2021 year on year, with total sales increasing by a significant 74.4% to reach R69.8-billion in May 2021, with the largest sales value being in household appliances at R135.1-billion.
SEIFSA Chief Economist Chifipa Mhango noted that while the improvement in manufacturing production was encouraging, the recent move to tighter lockdown regulations threatened to undo some of that improvement. “The move to level 4 adjusted of the national lockdown has been disruptive to overall economic activity and is also negatively affecting supply chains,” he said.
Mr Mhango said that the manufacturing sector is one of the backbones of the economy, however, its contribution to GDP has been declining since 1994. It is currently at 11, 9%, while the sector’s contribution to employment is also low, at 11,5%. He said the challenges that have eroded the manufacturing base continue to persist. These include declining demand levels, high electricity costs and increasing logistical costs among others.
“As SEIFSA, we continue to advocate for the speedy implementation of infrastructure investment into the South African economy, which has proved both locally and internationally to be a real catalyst for the revival of the manufacturing sector, especially within the M&E sector,” he said, adding that Government industrial incentives should be geared towards supporting the right industries while adopting an integrated policy approach to implementation.