Manufacturing production decreased by 2.3% year-on-year in May, brought down by the industries of motor vehicles, parts and accessories and other transport equipment which declined 19.2%, and subtracted 2.1 percentage points, reveals Statistics South Africa.

A 4.1% decline in the food and beverages sector also served to subtract 0.9 of a percentage point from the overall tally, while an 8.1% decline in the sectors of wood and wood products, paper, publishing and printing contributed to 0.8 of a percentage point cut from the overall figure.

Basic iron and steel, nonferrous metal products, metal products and machinery experienced a decline of 2.3%, taking half a percentage point from the overall tally.

Don Consultancy Group (DCG) chief economist Chifi Mhango says manufacturing production still reflects a weak environment, as the pressures of constrained electricity supply and rising industrial production cost base persist, despite a continued improvement in production sales since November 2021.

“The May production data marks a third consecutive month of contraction in manufacturing activity although at a slower pace than in the previous month, thus reflecting a slight recovery from the negative impact of the floods in KwaZulu-Natal province in the month of April,” he says.

However, industries that experienced improvements include the petroleum, chemical products, rubber and plastic products division, which rose 7.5% and contributed 1.5 percentage points.

When compared with April, seasonally adjusted manufacturing production decreased by 0.2% in May, following month-on-month changes of -5.7% in April and 0.2% in March.

Seasonally adjusted manufacturing production decreased by 3.4% in the three months ended May, compared with the first quarter of the year. Nine of the ten manufacturing divisions reported negative growth rates over this quarterly period.

Quarter-on-quarter, the petroleum, chemical products, rubber and plastic products sector’s output slipped 3.7%, subtracting 0.8 of a percentage point from quarterly manufacturing performance in the second quarter.

During the quarter, motor vehicles, parts and accessories and other transport equipment declined by 7.2%, taking away 0.7 of a percentage point, while a 2.8% slip in food and beverages manufacturing subtracted 0.6 of a percentage point from the overall tally.

SALES

Compared with April, seasonally adjusted sales increased by 2.5% in May, following month-on-month changes of -3.8% in April and 3.1% in March.

Quarter-on-quarter, seasonally adjusted manufacturing sales increased by 2.5% in the second quarter, buoyed by the industries of petroleum, chemical products, rubber and plastic products, which improved 7.6%, adding 1.4 percentage points.

A 2.6% improvement in food and beverages manufacturing also added 0.6 of a percentage point to the overall tally.

“Total unadjusted manufacturing sales continued to improve as final manufactured and intermediated goods prices escalate as depicted in latest producer price index of 14.7% and 15.6% respectively,” says Mhango.

Total unadjusted manufacturing production sales amount to R235-billion – an increase of 10.3% year-on-year in May, he says. “This was an improvement from the R214-billion in April, with the basic iron and steel, nonferrous metal products, metal products and machinery dominating the current monthly sales at R60.7-billion.”

He says the lowest sales values are from the radio, television and communication apparatus and professional equipment industries, at R2.3-billion.

Mhango explains that an unreliable supply of electricity, increasing logistical costs, the unstable nature of the labour environment and rising imports of finished goods into the South African economy hinder industrialisation progress in the South African economy.

“The global manufacturing landscape also depicts a mixed view amid the continued war in Ukraine, which is affecting global supply chains, energy supply, coupled with a rising production cost base,” he adds.

“Manufacturing production in the US increased by 4.7% year-on-year in May, while latest data from Europe shows a decline of 0.4%, with some Brazil, Russia, India, China and South Africa bloc countries, such as Brazil, registering growth of 1.6% recently,” says Mhango.

He adds that India’s latest manufacturing data reflects an increase of 6.3% year-on-year, with China’s manufacturing production growing marginally at 0.1% year-on-year.