Manufacturing output increased by 35.3% year-on-year in May, Statistics South Africa (Stats SA) reports.

The largest contributors to the increase in output were motor vehicles, parts and accessories, growing by 215% and contributing 8.9 percentage points; and basic iron and steel, nonferrous metal products, metal products and machinery, growing by 42% year-on-year and contributing eight percentage points.

Next most prolific were food and beverages, growing by 21.5% and contributing 7.4 percentage points; and wood and wood products, paper, publishing and printing, growing by 40% year-on-year and contributing four percentage points.

The Steel and Engineering Industries Federation of Southern Africa (Seifsa) chief economist Chfipa Mhango says that while the improvement in manufacturing production was encouraging, the recent move to tighter lockdown regulations threaten to undo some of that improvement.

Stats SA reports that seasonally adjusted manufacturing production decreased by 2.6% in May, compared with April, which followed month-on-month changes of -1.2% in April and 3.7% in March.

Nedbank says manufacturing production remains well below its pre-pandemic levels, with output 7.5% weaker than its 2019 levels and 8.4% lower than the 2017 to 2019 average.

For the three months ended May, seasonally adjusted manufacturing output increased by 1%, with six of the ten manufacturing divisions reporting positive growth rates, compared with the preceding three months.

The largest negative contributor to the seasonally adjusted manufacturing output for the three months ended May was made by the petroleum, chemical products, rubber and plastic products division, declining by 5.1% and contributing -1 percentage point.

Moreover, seasonally adjusted manufacturing sales decreased by 0.1% in May, compared with April. This followed month-on-month changes of -2.4% in April and 6.3% in March.

Nedbank comments that until base effects are wholly eradicated, forecasting manufacturing activity will remain quite challenging. Severe power outages in June, the onset of the third Covid-19 wave and the ban on alcohol sales will hurt production over the next few months.

Thereafter, the bank assumes that recovery will resume, supported by robust global demand and high commodity prices.

Particularly, Seifsa points out that within the Metals and Engineering (M&E) sub-sectors of the manufacturing sector, which accounts for 29% of total manufacturing production, total production across the 13 sub- categories increased by an average of 69.8% year-on-year in May, with total sales increasing by a significant 74.4% to reach R69.8-billion in May , with the largest sales value being in household appliances at R135-billion.

Mhango believes that the manufacturing sector remains plagued by declining demand levels, high electricity costs and increasing logistical costs.