Manufacturing production in South Africa decreased by 5.4% year-on-year in March, likely as a result of the Covid-19 pandemic and subsequent lockdowns.

The largest negative contribution was made by basic iron and steel, nonferrous metal products, metal products and machinery, which was down by 8.5% and contributed 1.8 percentage points.

Petroleum, chemical products, rubber and plastic products was down by 5.8% and contributed 1.3 percentage points; while motor vehicles, parts, accessories and other transport equipment was down by 13%, and contributed 1 percentage point.

Wood, wood products, paper, publishing and printing, meanwhile, was down by 4.9% and contributed 0.5 of a percentage point; while glass and non-metallic mineral products was down by 13.5% and contributed 0.4 of a percentage point.

Overall, seasonally adjusted manufacturing production decreased by 1.2% in March compared with February, which followed month-on-month changes of -2.6% in February and 2.8% in January.

Seasonally adjusted manufacturing production decreased by 2.1% in the first quarter of 2020 compared with the fourth quarter of 2019, whereas nine of the ten manufacturing divisions reported negative growth rates over this period.

The largest negative contributions were made by petroleum, chemical products, rubber and plastic products (-4.6% and contributing 1.1 percentage points); basic iron and steel, nonferrous metal products, metal products and machinery (-2.8% and contributing -0.5 of a percentage point) and motor vehicles, parts, accessories and other transport equipment (-4% and contributing -0.3% of a percentage point).

According to Steel and Engineering Industries Federation of Southern Africa (Seifsa), the latest manufacturing production data released by Statistics South Africa on June 11 is “consistent with the economy’s poor performance” since the beginning of the year and “does not bode well for the future”.

In a separate statement on Thursday, Seifsa economist Marique Kruger said the data “does not augur well for businesses, especially considering the tough economic environment and the Covid-19 economic crisis, a generally weaker exchange rate and volatile input costs which generally reduce business margins”.

She said it was imperative that policy makers gave serious consideration to providing incentives that would boost demand for locally manufactured goods in order to improve production levels.

Kruger further suggested that it “may also be important for the government to reconsider administered prices which have a bearing on logistics costs”, such as some of the fuel levies, for struggling businesses.

She said such an intervention was likely to boost consumer demand and have positive spill-over implications for both capacity utilization and local businesses’ production potential.