The decline in manufacturing output could be reversed if labour “softened its preoccupation with high-level politics" and if industry- and company-level agendas on investment, growth and job creation, were pursued instead, Manufacturing Circle (ManCirc) executive director Coenraad Bezuidenhout said on Thursday.

Commenting on the release of Statistics South Africa’s latest manufacturing statistics, which showed a decline in manufacturing output for September, he noted that the aftershocks of the strike action during the third quarter could still emerge in the form of deferred or unfavourable investment decisions.

“Private sector unions are experiencing declining numbers and dissatisfaction with their politicised nature and failure to connect with the needs of their members. Strong industry- and company-level agenda setting in pursuit of growth and job creation can turn this decline around,” he explained.

Manufacturing output contracted 3.3% year-on-year in September, despite market expectations that industry output would remain flat, on the back of lower production in the motor vehicles, parts and accessories and other transport equipment division, which reported a decline of 49.7% year-on-year, contributing 4.3 percentage points to the overall decrease.

Growth had already slowed sharply in August to 0.2% year-on-year, from 5.7% year-on-year in July, Investec economist Kamilla Kaplan pointed out.

Meanwhile, output in eight of the ten manufacturing sectors had contracted in the three months ended September, with production in the quarter showing an overall decrease of 2.1%, compared with the preceding quarter.

The motor vehicles, parts and accessories and other transport equipment division, with a decrease of 26.6%, contributing -2.4 percentage points, was the largest negative contributor.

The automotive sector had been negatively impacted by protracted strike action during July and August.

Kaplan noted that, as the effects of the labour strike started to dissipate in October, production should improve. However, in the year-to-date, manufacturing production expanded by 1.3%, below the 2.1% expansion in the same period last year.

The 12-month rolling average signalled a loss of momentum in manufacturing sector activity.

"An advance indication has been provided by the Purchansing Managers Index (PMI), which rose to an index level of 50.7 in October, from 50 in September. Despite the improvement, the PMI still signals flat activity in the manufacturing sector," she explained.

“The outlook for the manufacturing sector remains subdued. Export performance will be undermined by still weak global growth conditions, while the performance of local-orientated industries will be undermined by softer household spending and relatively subdued fixed investment activity,” Nedbank’s economic unit added.

However, Bezuidenhout pointed out that, with the rand at weak levels, demand from African export markets showing promise and the eurozone and the US showing recovery momentum, the time was now to take positive action.

“If we fail to do this, the economy will keep limping along and fail to deliver the shared prosperity that will support South Africa's democratic stability,” he said.