While the year-on-year uptick in demand for construction and building materials in June was from a low base, it is a welcome development for the metals and engineering (M&E) sector, says the Steel and Engineering Industries Federation of Southern Africa (Seifsa).
The federation adds that the demand uptick indicates a steady increase in economic activity as the country adjusts to living in a pandemic.
Wholesale trade sales data released by Statistics South Africa (Stats SA) on August 20 showed an increase in sales of 10.3% in June, compared with June 2020, to reach R155.7-billion in constant terms, with a month-on-month decline of 5.1% recorded in June, compared with May, and a 13.8% increase in the year to date.
The main contributors to the increase were construction and building materials; solid, liquid and gaseous fuels and related products; and other intermediate products, waste and scrap.
Sales of construction and building materials declined slightly to R11.6-billion in June, from R13.2-billion in May, with year-on-year growth of 29.6% in June.
Seifsa mainly attributes this to discouragingly rising costs that reduced activity in the residential segment.
According to Seifsa chief economist Chifipa Mhango, the improvement from last year is mainly owing to increased building and construction activity this year.
He said the increase coincides with a rise in M&E production sales to R81-billion in June from R78.9-billion in May.
In the first six months of the year, total building and construction activity reached R69.9-billion, thereby representing growth of 69.2% when compared to the first six months of 2020.
Mhango said increased activity in building and construction bodes well for the M&E sector.
“The resulting increase in demand for M&E products is welcome, though we do urge government to partner with us to find ways to sustain the recovery of the industry, which has been struggling due to, among others, rising electricity and transport costs.”
Mhango added that the civil unrest and looting in mid-July in KwaZulu-Natal and Gauteng would have caused a dent in sales figures for the month of July.
“We are yet to assess the complete picture; however, it is crucial that government continues to put measures in place to avoid further disruptions that could negatively hamper the supply patterns as well as production,” he noted.