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Continued increase in manufacturing production and sales data is encouraging

Home Engineering Engineering & Allied Supplies Continued increase in manufacturing production and sales data is encouraging

The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is encouraged by manufacturing data released by Statistics South Africa’s (StatsSA) today which indicates an uptick of 1.3 percent in total manufacturing production on a year-on-year basis in September 2021 compared to September 2020.

The improvement in manufacturing data is despite the current disruptions caused by Eskom load-shedding which has significantly affected production.

“According to the manufacturing data, total manufacturing sales increased by 9.0 percent year-on-year in September 2021, compared to September 2020. The Metals and Engineering (M&E) sector’s annual performance was generally in line with that of broader manufacturing production which increased with a year-on-year basis average of 4.6 percent in September 2021. Total sales increased by 17.0 percent to reach R82.9 billion in September 2021.

The increase in manufacturing output, and specifically in the M&E sector, is line with total manufacturing capacity utilisation data which improved to 78.0% in the third quarter of 2021 compared with 71.7% in the third quarter of 2020. Within the M&E sector, capacity utilisation improved significantly to 74.9% in the third quarter of 2021 compared to 66.1% in the third quarter of 2020,” said Palesa Molise, SEIFSA Economist

The expansion in output is encouraging as it filters down to companies in the M&E sub- sectors which are under duress. Moreover, given the multiplicity of challenges faced by businesses, the uptick of output data provides a glimmer of hope that momentum will continue to increase in the coming months. However, the re-introduction of Eskom load-shedding, high electricity and fuel costs and volatility in the exchange rate will place significant strain on production levels.

“The Metals & Engineering sector has recently come out of a three-week industrial action which cost the industry immensely. Therefore, an urgent response to the issue of Eskom load-shedding is required for the broader manufacturing sector and for the M&E sector companies to regain momentum and to boost production and sales levels by leveraging on the relaxed lockdown level restrictions.” said Molise.

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