The only thing that could be said with certainty is that the outlook for the domestic metals and engineering sector is “very uncertain”, Steel and Engineering Industries Federation of Southern Africa (Seifsa) chief economist Henk Langenhoven said following the release of the July manufacturing statistics, showing a strong rise in metals-related output.

“[This year] has, so far, been marginally worse than the turbulent first seven months of last year. “When the 12 months ended July 31 are compared with the same period last year, a 1.1% contraction is still evident. “This shows the weakness in the sector,” Langenhoven noted.

He further pointed out that forward-looking confidence indicators were pointing in different directions.

If the Bureau for Economic Research’s (BER’s) third-quarter manufacturing survey data was anything to go by, confidence in manufacturing had improved slightly in the third quarter, but the expected business conditions in 12 months have deteriorated.

The all-important monthly business activity subindex of the Purchasing Managers’ Index had also declined in August, again showing fragility and volatile expectations changing from one period to the next.

This was supported by the BER’s overall business confidence index, which showed that sales of intermediary goods, chemicals, basic metals and metal products, as well as capital goods, transport, machinery and equipment, contracted in the third quarter.

As a result, August and September production numbers were expected to move sideways or contract again.

Comparing the July production numbers with those for July 2014, the subindustries in the sector showed “wild improvements”, ranging from 2.1% to 56%.

However, comparing July with June this year showed contractions in nonferrous metals of 5.7%, other fabricated metals, down 3.8%, a 0.7% decline in general machinery and a 5.5% drop in household appliances.

Langenhoven highlighted that over a 12-month, seasonally adjusted period, component industries improved and declined.

“The question remains how much longer this will continue. “The metals and engineering sector depends on the international market in the form of exports, mining, the automotive sector and construction as its biggest markets,” he said.

He added that confidence for both export and domestic sales orders was declining and, while mining production numbers for June had shown a 4% year-on-year improvement, output was only 1.1% better on a month-on-month basis.