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The only ray of light in the manufacturing sector over the last year had been that January production had been slightly higher than in December, Steel and Engineering Industries Federation of Southern Africa (Seifsa) chief economist Henk Langenhoven said on Friday.
Speaking after the release by Statistics South Africa of the latest manufacturing production figures on Thursday, Langenhoven noted that this increase was mainly the result of a recovery in the basic iron and steel sector and household appliances industries.
The recovery in the basic iron and steel industry was mainly owing to one of the large producers bringing its plant up to normal capacity after a period of maintenance in the second half of 2014. Therefore, the increase in output from this subsector was not an indication of true recovery.
Langenhoven added that this was indeed a “sad state of affairs”, as most of the other industries making up the metals and engineering sector had seen their output contract by much more than the overall performance indicated on a 12-month seasonally adjusted basis.
Seifsa earlier stated that it did not foresee any growth for the sector this year.
Langenhoven said that with domestic economic uncertainties, the balance of payments and budget deficits, as well as the renewed strength of the dollar, it seemed as if a weakening currency could hold the only hope for better export earnings from the sector, if sufficient electricity was available to produce the products.
“It seems as if the sector finds itself at the centre of contradictory forces, policy choices and constraints, a difficult position, indeed,” he pointed out.