The Steel and Engineering Industries Federation of Southern Africa (Seifsa) reports that an uptick in sales of construction and building materials, amid increased construction activity, is encouraging and bodes well for the metals and engineering sector.
Seifsa chief economist Chifipa Mhango says the increase in the sale of construction and building material has mainly been driven by the steady easing of lockdown restrictions, which led to an increase in demand for building supplies such as steel, cement and bricks, besides others.
However, he also expresses concern about the accompanying decline in wholesale trade sales. Wholesale trade sales data released by Statistics South Africa on March 18 show a sales decline of 7.1% year-on-year in January.
Month-on-month wholesale trade sales decreased by 0.6% in January, when compared with December 2020.
However, sales of construction and building materials increased from R8.9-billion in December 2020, to R10.5-billion in January this year, with expansionary year-on-year growth of 45.1% in January.
Mhango notes that the increase in the sale of construction and building material is positive news for the metals and engineering sector. This improvement was attributed to the increase in construction activity, which followed the relaxation of Covid-19 lockdown regulations, as more workers returned to work.
This also coincided with a welcome increase in metals and engineering production sales, which improved significantly from R58-billion in December 2020, to R63-billion in January this year.
He adds that, as the economy opens up and more Covid-19 vaccines are rolled out, Seifsa anticipates further green shoots in the sale of construction building materials.
“The rolling out of key government infrastructure projects to the total value of R791.2-billion in public sector spending into the next three fiscal years is also good news to the metals and engineering sector, as we expect demand for construction and building materials to improve further.”