BMW workers at an automobile plant in Rosslyn, Pretoria. (Photo: Gallo Images / Lefty Shivambu)
It has become a depressing refrain in the symphony of the South African economy: manufacturing disappointments. South African manufacturing production declined 2.1% year over year in February 2021, StatsSA announced yesterday. And to rub salt into the wound, a 0.4% drop was expected.
Manufacturing in South Africa continues to decline, falling 2.1% in February after revising up 4.2% in January.
Some sectors have narrowed their declines by multiple, with food and beverages down a smidgeon, compared to a 6.1% decline in January. Petroleum, chemical, rubber and plastic products also fell, declining 8.4% in February, compared to a 14.1% decline in January.
The hero of the hour was the motor vehicles, parts and accessories category, which grew 13.2% and made a significant positive contribution, pulling the entire series up by more than one percentage point.
Manufacturing in SA was positive in December, but other than that, it has declined every month for the past 18 months and saw massive declines during the lockdown period.
Virág Fórizs, Emerging Markets Economist at Capital Economics, said in a statement to clients that tThe road to recovery in South African manufacturing will “likely be slow and bumpy”.
“Weak domestic demand and persistent blackouts will be the main headwinds, although export-oriented sectors are likely to benefit from a sustained recovery in external demand,” he said.
Looking ahead, foreign demand is likely to hold up as the trading partner economies continue to recover in the months ahead.
“The latest manufacturing PMI gave some encouraging signs [Purchasing Managers’ Index] read. However, slow adoption of vaccines, prolonged blackouts and austerity measures will weigh on domestic demand, ”he said Forizs.
“Overall, we wouldn’t hold our breath for a quick recovery in production this year.” DM / BM