Seifsa ‘disappointed’ by slower Feb manufacturing output growth

11th April 2019 By: Marleny Arnoldi - Creamer Media Online Writer

Seifsa ‘disappointed’ by slower Feb manufacturing output growth

Seifsa economist Michael Ade
Photo by: Creamer Media's Dylan Slater

The latest preliminary data published by Statistics South Africa (Stats SA) indicates that production in the broader manufacturing sector grew at a slower pace in February than in January.

On a continuous three-monthly basis, output in the manufacturing sector has been volatile, increasing from 0% in December 2018 to a 0.9% year-on-year increase in January and then slowing to a 0.6% year-on-year increase in February.

The monthly data reflects a high level of volatility, the Steel and Engineering Industries Federation of Southern Africa (Seifsa) said on Thursday.

Seifsa economist Michael Ade stated that manufacturing production was “disappointing” and does not augur well for both the metals and engineering cluster of industries and the broader manufacturing sector.

He added that the metals and engineering cluster continuously faces headwinds underpinned by low domestic demand, unpredictable energy supply and high petrol prices. These all add to the increasing logistics costs of companies.

However, in spite of the difficult operational environment, Ade remains confident that companies within the metals and engineering cluster would stay resilient and navigate the challenges posed by a “spluttering economy”.

STATISTICS

Meanwhile, Stats SA’s data, which was released on Thursday, showed that seasonally adjusted manufacturing production decreased by 1.8% in February compared with January. This followed month-on-month changes of -1.6% in January and 0.5% in December 2018.

Seasonally adjusted manufacturing production decreased by 0.6% in the three months ended February, compared with the previous three months.

The largest negative contributions were made by basic iron and steel, nonferrous metal products, metal products and machinery, at -2.6% and contributing -0.5 of a percentage point; and wood and wood products, paper, publishing and printing, at -3.2% and contributing -0.4 of a percentage point.

Six of the ten manufacturing divisions reported negative growth rates over the period.

However, manufacturing production increased by 0.6% in February when compared with February 2018. The largest positive contributions were made by food and beverages, at 3.2% and contributing 0.8 of a percentage point; and petroleum, chemical products, rubber and plastic products, at 2.9% and contributing 0.7 of a percentage point.