Dip in manufacturing production concerning, says SEIFSA
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The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is concerned by the preliminary data released by Statistics South Africa (Stats SA) today, capturing a decrease in manufacturing production for the month of August.
The Federation’s Economist, Marique Kruger, said the decrease in output is disappointing, given the need for companies in the Metals and Engineering (M&E) cluster and the broader manufacturing sector to remain resilient against the backdrop of a stagnant economy.
The latest preliminary seasonally-adjusted production data captures a year-on-year decrease in production in the broader manufacturing sector in August 2019 when compared with July 2019. Manufacturing output decreased from -0.7 percent in July 2019 to -1.8 percent in August 2019. On a month-on-month basis, output in the broader manufacturing sector was 1.3 percent in August 2019, highlighting the volatility which is still evident.
“The performance is worrisome and compounds the multiplicity of the challenges faced by businesses in the manufacturing sector in general, and the M&E sub-sector in particular,” Ms Kruger said.
She said that the headwinds faced by businesses are underpinned by low domestic demand, volatile input costs and high petrol prices, in addition to logistics costs.
“It is also disconcerting to note that manufacturing companies were unable to increase capacity towards higher production in August 2019, given the existence of supply constraints and poor inventory turnover.
“Hopefully, companies will be able to rebound from their poor performance towards enhanced growth and contribution to the Gross Domestic Product in the short to medium term,” she concluded.
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