Uptick in capacity utilisation in the manufacturing sector
JOHANNESBURG – The improvement in manufacturing sector capacity utilisation even as South African remains under lockdown is encouraging, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said yesterday.
Data released by Statistics South Africa (Stats SA) today shows total capacity utilisation was 78.6% in the second quarter of 2021 compared with 59.8% in second quarter of 2020, thus representing an increase of 18.8%. Within the Metals and Engineering (M&E) sector, capacity utilisation significantly improved to 77.1% in the second quarter of 2021, from 52,9% in second quarter of 2020.
All the manufacturing divisions showed increases in utilisation of production capacity in May 2021 compared with May 2020. Within the M&E sector, motor vehicles, parts and accessories and other transport equipment recorded utilisation of production capacity above 80% in the second quarter of 2021.
SEIFSA Chief Economist Chifipa Mhango said this is welcomed news as it demonstrates that if lockdown regulations are further eased as the vaccine roll-out ramps up, production levels can increase under improved demand conditions.
In recent months, the manufacturing sector has also showed signs of improvement in terms of production patterns with year-to-date production improvement of 17.1 % to May 2021.
“Though there are improvements in total capacity utilisation, we are still operating at a level lower than 80% benchmark. Increased levels of industrial domestic demand are required for manufacturers to fully reboot capacity utilisation levels,” Mr Mhango said.
He said for production and capacity utilisation patterns to significantly improve, the Government needs to support the ailing manufacturing economy through effective implementation of the policy solutions as identified in the Steel and Metal Beneficiation Master Plan. “This is key if the M&E sector is to reverse the current decline in levels of employment and investment, while strengthening our trade position with the rest of the world,” he concluded.
