- Manufacturing production has declined for the 10th straight month.
- Only food and beverages increased – by 1%.
- Manufacturing data for April is projected to have fallen sharply due to lockdown.
Manufacturing production declined by 5.4% in March, marking the 10th consecutive month of contraction.
The figures released on Thursday by Stats SA shows that the biggest negative contributors were the basic iron and steel producers, having declined by 8.5%. This was followed by the petroleum and chemical products industry and the motor vehicles and transport equipment manufacturers.
Overall declines were broad-based – across a range of categories, except for food and beverage which increased by 1%, noted Investec economist Lara Hodes.
Production in March declined 1.2% compared to February. Manufacturing production for the first quarter of the year declined 2.1%, compared to the fourth quarter of 2019, Stats SA indicated. “Nine of the ten manufacturing divisions reported negative growth rates over this period,” the report read.
Hodes said the declines in the sector reflected the “depressed” economic situation. The March figures do not yet reflect the impact of the pandemic, but global supply disruptions linked to the lockdown restrictions in many other countries may have impacted the reading, said Hodes.
Poor outlook
Hodes said manufacturing data for April is projected to have fallen sharply, as the domestic lockdown was in full force.
“The manufacture of only essential products was permitted in April, with most of the sector therefore shut down,” she said.
A significant contraction projected for the year, with some analysts predicting as much as 10%, coupled with protracted lockdown restrictions and depressed demand, will weigh heavily on a revival in the sector, said Hodes.
Geoff Nölting, FNB Economist said that “deeper contractions” in manufacturing output is expected for April and May. “This can be attributed to the majority of manufacturers remaining closed due to lockdown regulations as well as disruptions to global supply chains,” he said.
Despite lockdown restrictions easing in the second half of the year, the sector may continue to face several challenges, he added.
