Manufacturing output increased by 1.8% in December 2020 compared with December 2019, Statistics South Africa (Stats SA) reported on February 11.
Nedbank said it was the first time that annual factory output had grown since May 2019, surpassing the bank’s expectation of a contraction.
The largest positive contributions were made by food and beverages, growing by 6.4% and contributing 2.2 percentage points; and motor vehicles, parts and accessories and other transport equipment, growing by 18.1% and contributing 0.8 of a percentage point.
Basic iron and steel, nonferrous metal products, metal products and machinery also contributed positively with growth of 3.6% and contributing 0.6 of a percentage point, while wood and wood products, paper, publishing and printing output had grown by 3.7%, contributing 0.4 of a percentage point.
Stats SA said that the petroleum, chemical products, rubber and plastic products division was a significant negative contributor, with it being down 12.3% and contributing -2.9 percentage points.
Meanwhile, seasonally adjusted manufacturing production decreased by 0.1% in December 2020 compared with November 2020. This followed month-on-month changes of -0.6% in November 2020 and 2.5% in October 2020.
For the full year, manufacturing production decreased by 11% compared with 2019.
Nedbank noted that this was still better than the 13.8% slump seen during the 2009 financial crisis.
All ten manufacturing divisions reported negative growth rates over this period.
The largest contributions were made by basic iron and steel, nonferrous metal products, metal products and machinery sector, with output down by 13.1% and contributing -2.4 percentage points; and motor vehicles, parts and accessories and other transport equipment, which was down 26% and contributing -2.1 percentage points.
Petroleum, chemical products, rubber and plastic products also lagged behind, decreasing by 9.1% and contributing -2 percentage points, while wood and wood products, paper, publishing and printing was down 13.3% and contributing -1.4 percentage points.
For the year, food and beverages manfacturing was down 4.2%, contributing -1.2 percentage points.
On a quarterly basis, seasonally adjusted manufacturing production increased by 5.2% in the fourth quarter of 2020 compared with the third quarter of 2020.
Nine of the ten manufacturing divisions reported positive growth rates over this period, with food leading the way at 5.4% growth and contributing 1.7 percentage points, followed by motor vehicles, parts and accessories and other transport equipment increasing by 22.3% and contributing 1.5 percentage points.
Nedbank said manufacturing had been among the biggest sectors that were worst impacted by Covid-19, with restrictions both locally and abroad impeding output levels.
Still, manufacturing and mining production ended the year stronger than the bank had anticipated, providing much-needed hope of a better-than-expected fourth-quarter gross domestic product number.
Looking ahead, apart from base-effects, declining Covid-19 cases, vaccine roll-outs as well as recent purchasing managers indices remaining in expansion both domestically and across the globe, provides hope of a stronger 2021, stated Nedbank.
It warned, however, that the resumption in load-shedding and the ongoing underlying structural constraints still posed downside risks to the sector's recovery.