11 June 2021 – Manufacturing output in South Africa has yet to stabilise to a strong recovery after surging at a record pace year-on-year in April, but still fell in comparison to the previous month.
Data from Statistics South Africa (StatsSA) yesterday showed that production rose by a record increase of 87.9 percent in April compared to the same month last year.
Production plummeted -48.7 percent in April last year when rigorous level 5 measures were imposed to curb the infection rate.
This year’s April production print was not far from market expectations of 88.3 percent year-on-year from low base effects from last year when production was restricted due to the Covid-19 pandemic and the lockdown.
StatsSA’s director of industry statistics Nicolai Claassen said all manufacturing divisions recorded positive year-on-year results in April.
“The basic iron and steel, the metals products division, and the automotive division were the most significant contributors to overall manufacturing growth,” Classen said.
“On a month-on-month basis, production decreased by 1.2 percent in April compared with March.
“This followed a monthly increase of 3.7 percent in March, and monthly decreases of 1.2 percent in February and 0.2 percent in January.”
Seasonal factors, coupled with public holidays in April, largely underpinned the month-on-month decline in output.
However, sentiment among manufacturers remains positive, with growth in output anticipated over the next 12 months.
FNB economist Thanda Sithole said the sector’s growth performance should benefit from easier lockdown restrictions and improving local and external demand.
“In addition, the extent to which the sector’s inventories fell last year means it could ramp-up production to meet rising local and external demand,” Sithole said.
“We are, however, more concerned about the disruptive impact of continued load-shedding, which could curtail production.”
Other economists also expressed concern over the decline in seasonally adjusted manufacturing output, which is critical for the official calculation of quarterly real GDP growth.
PricewaterhouseCoopers’ Lullu Krugel said the economy will only return to its pre-pandemic size by 2023, or even later.
“It could happen sooner under the upside scenario, though at the same time a sluggish recovery under the downside scenario could see the timeline extended to 2027,” she said. Source (Business Report)