Manufacturing production decreased by 0.1% in December, compared with December 2020, but total manufacturing production for 2021 increased by 6.4% compared with 2020.
Statistics South Africa reports that the largest negative contribution to December’s manufacturing output was made by motor vehicles, parts and accessories and other transport equipment, declining by 8% and contributing -0.5 of a percentage point.
Petroleum, chemical products, rubber and plastic products also contributed negatively to the headline numbers, with the segment’s output contracting by 2.3% and contributing -0.5 of a percentage point in the reporting month.
The largest positive contributions were made by wood and wood products, paper, publishing and printing, growing by 5% and contributing 0.5 of a percentage point; and electrical machinery, recording 23.4% growth and contributing 0.4 of a percentage point.
Seasonally adjusted manufacturing production increased by 2.3% in December, compared with November.
This followed month-on-month changes of 4.9% in November and -5.4% in October.
Seasonally adjusted manufacturing sales were 28% higher in December, compared with the preceding month. This followed month-on-month changes of 8.7% in November and -6.3% in October.
Nedbank comments that manufacturing output in December ended up being better than the bank expected, which was a contraction of between 0.2% and 0.6%.
The bank states that, even though manufacturing activity declined for the third consecutive month, the rate of contraction seems to be slowing down, suggesting that a gradual recovery is under way.
As the impact of Omicron subsides and the world returns to normality, further improvements are expected over the year. There is also evidence of fewer global supply chain issues and easing raw material shortages, which also brightens the sector's outlook.
“However, manufacturers will have to contend with a range of factors, including a weaker exchange rate, rising oil prices, higher wage bills and further interest rate hikes – all of which will add upward pressure on the cost of production,” Nedbank says.
RECOVERY YEAR
In the full year, nine of the ten manufacturing divisions reported positive growth rates, the largest positive contribution being made by motor vehicles, parts and accessories and other transport equipment, growing by 34.1% and contributing 2.6 percentage points.
More positive contributors last year were basic iron and steel, non-ferrous metal products, metal products and machinery, expanding by 9.9% and contributing 1.9 percentage points; food and beverages, growing by 6.1% and contributing 1.5 percentage points; and wood and wood products, paper, publishing and printing, which grew by 9.9% and contributed one percentage point.
Nedbank says that output remains below pre-pandemic levels, with output 4.1% lower than the December 2017 to 2019 average – with six of the ten subcategories still in the red.