Slowdown in Manufacturing Output is Concerning

SEIFSA CEO Kaizer Nyatsumba.
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The slowdown in the broader manu-facturing sector’s production, as reflected in manufacturing production figures released by Statistics South Africa (Stats SA) recently, is concerning, the Steel and Engineering Industries Federation of Southern Africa said recently.

Speaking after the release of the data, SEIFSA Economist Marique Kruger said against the backdrop of a struggling economy and the plethora of challenges faced by manufacturing companies, production volume from businesses took a knock and the official output data reflects a constrained business environment for manufacturing companies.

The latest preliminary seasonally-adjusted data released captures a year-on-year slowdown in production in the broader manufacturing sector in June 2019 when compared with May 2019, with output dipping to -3.2 percent in June 2019, from 0.4 percent recorded in May 2019. Moreover, the volatility in the data is more pronounced when analyzed on a month-to-month basis.

“The dip in the year-on-year manufacturing output data highlights the urgent need to deal with underlying dynamics leading to a depressed economic environment and high unemployment numbers,” Kruger said.

However, she pointed out that the expectation is for companies in the broader manufacturing sector in general and the metals and engineering sector in particular to take advantage of a possible up-turn when the much-anticipated quarter 2 GDP data are released. The upturn in GDP is imperative in order to grow the domestic economy and create jobs in the long term.

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