‘Manufacturing production stats encouraging but volatile’
15 Mar 2019 - by
The sustained positive trajectory in production of the broader manufacturing sector is encouraging but still volatile, in the view of Steel and Engineering Industries Federation of Southern Africa (Seifsa) economist Marique Kruger.
Speaking after yesterday’s release of manufacturing production figures by Statistics South Africa (Stats SA), Kruger said “although the year-on-year output had consecutively decreased in the three months leading to December 2018, production was still positively trending”. The encouraging performance had continued into the new year as companies remained buoyant despite a generally softening domestic business confidence and business expectation, she added.
“However, the volatility in the data is more pronounced when analysed on a month-to-month basis.”
The latest preliminary seasonally adjusted data reveals a year-on-year increase in production in the broader manufacturing sector in January 2019 compared with December 2018. Manufacturing production increased by 0.3% in January 2019 compared with January 2018. On a month-to-month basis, output in the broader manufacturing sector decreased by 2.0% in January 2019, compared with December 2018.
“Despite the encouraging long-term performance in the wider manufacturing sector, a major concern still remains, as the largest negative contributions in the three months ended January 2019 were made by the broader metals and machinery cluster of industries. In addition, the apprehension is that of a broad-based weakening in activity in industrial production – including the mining, electricity, gas and construction sectors impacting negatively on manufacturing, given the high level of interdependence,” Kruger said.
She added that the manufacturing sector continued to face headwinds underpinned by increased volatility, low domestic demand, high petrol prices which compounded logistics costs of companies, and increasing energy cost.