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Manufacturing Continues On Downward Slump

11 September 2020 – Manufacturing production decreased by 10.6% year-on-year in July, with the largest decline in furniture and other manufacturing, which declined by 39.1% and contributed -1.4 percentage points to the overall decline.

The second highest decline was in motor vehicles, parts, accessories and other transport equipment, which declined by 26.9% during the month and contributed -2.4 percentage points.

Wood, wood products, paper, publishing and printing declined by 13.1% and contributed -1.4 percentage points, while basic iron and steel, nonferrous metal products, metal products and machinery declined by 11.6% and contributed -2.1 percentage points.

Food and beverages production decreased by 11.4% and contributed -3.3 percentage points to the overall manufacturing production decline.

Seasonally adjusted manufacturing production, meanwhile, increased by 7.6% in July, compared with the month before. This follows month-on-month changes of 17.9% in June and 29.7% in May.

Seasonally adjusted manufacturing production decreased by 2.9% in the three months ended July, compared with the previous three months. Four of the ten manufacturing divisions reported negative growth rates over this period, of which furniture and other manufacturing reported the biggest decline of 28.5%, and contributed -0.8 of a percentage point.

The second highest negative contribution came from motor vehicles, parts, accessories and other transport equipment, which declined by 13.9%, contributing -0.8 of a percentage point.

Food and beverages meanwhile contributed -2.3 percentage points with its 7% decline.

Wood, wood products, paper, publishing and printing contributed -0.5 of a percentage point as the sector declined by 5.1% over the period.

Looking ahead, the Nedbank Group economic unit said that the rebound in activity would likely continue and be supported by a gradual recovery of global demand conditions, particularly in Asia and Europe.

Nedbank noted that this was confirmed in the August Purchasing Manager’s Indices, which suggested that most countries were expanding output.

On the domestic front, however, the upside would be contained by the resumption of load-shedding and a volatile rand exchange rate. So far this year, total output had declined by 17.1%, and Nedbank forecast that the sector would probably end the year on a lower number. Source (Engineering News)