Rot sets into manufacturing sector

November manufacturing data released on Thursday reflects the reality of what could be a fairly fast slowdown in South Africa’s economy in the early parts of 2009 as the country’s second biggest sector hits its worst levels in 10 years.

Thursday’s data shows that the physical volume of manufacturing in South Africa in November declined by -4,4% year-on-year (y/y) after a revised decrease of 1,8% (-1,6% y/y) in October and is at a concerning -12% on a seasonally adjusted and annualised basis.

The last time the annualised numbers were this bad was in January 1998, when they struck -12,4% on a seasonally adjusted annualised basis. However, unlike that period in 1998, the decline has been faster, coming off growth of 15% in the second quarter of this year.

All in all it is not good news for the economy and does raise the spectre of potential job losses because the global slowdown also feeds into it.

For example, manufacturing production drops of 6% in Germany have been called a “nightmare” by their commentators, which will filter into the local market as we manufacture a high proportion of heavy goods.


Basic iron and steel, non-ferrous metal products, metal products and machinery make up 22,4% of the local index and that is also where the problems are coming in.

The seasonally adjusted data for basic iron and steel shows that this sector dropped a marked 28,2% between September and November when compared with the preceding three months.

It contributed a full -1,6 percentage points to the seasonally adjusted percentage change in total manufacturing production.

The data shows that the seasonally adjusted manufacturing production for the three months ended November 2008 decreased by 3,1% compared with the previous three months.

But the rot has also set in among other sectors, like motor vehicles parts and accessories, which dropped -7,7% quarter on quarter.

Petroleum, chemical, rubber and plastic products also fell on a seasonally adjusted basis by -4,4% from the quarter before. This sector makes up 22,5% of the total and contributed -1 percentage points to the decline.

Added to the above can be the fact that cement sales in Southern Africa declined 20,2% y/y in November to 1,158 million tons, according to data from the Cement and Concrete Institute.

The problems are clearly widespread, also borne out by the fact that the estimated consumption of electricity in South Africa in November 2008 declined 5,7% y/y compared with -1,4% y/y in October 2008.

Growth in manufacturing in December is not likely to emerge, evidencing the fact that the local economy is slowing very quickly and fears of a technical recession in the first half have been aired. They may become more widespread when all of the above is plugged in and interpreted. — I-Net Bridge

Subscribe to the M&G

These are unprecedented times, and the role of media to tell and record the story of South Africa as it develops is more important than ever.

The Mail & Guardian is a proud news publisher with roots stretching back 35 years, and we’ve survived right from day one thanks to the support of readers who value fiercely independent journalism that is beholden to no-one. To help us continue for another 35 future years with the same proud values, please consider taking out a subscription.

Related stories

South Africa prioritises fossil fuels over clean energy in post-Covid-19 recovery packages

The country is among the G20 countries who have invested in electricity produced from coal, oil and gas at the cost of addressing climate change

Challenges and opportunities for telemedicine in Africa

Telemedicine in Africa is currently limited by the availability of basic infrastructure, but, considering the lack of doctors in rural areas, it is a vital component in addressing the continent’s healthcare needs

Fight the disease of corruption in the same way we fight the coronavirus

Gogo Dlamini, Themba Dlamini’s mother, died of Covid-19, but Mzanzi has a chance to rid the country of fraud and exploitation and instead serve ‘Gogo Dlamini’, the people of South Africa

This time it’s different: African economies may not survive

Amid the headwinds created by the Covid-19 pandemic, it’s time the Aloe ferox, which survives in dry, harsh conditions, is nurtured — but the options are limited

The SADC will regret its approach to Mozambique’s insurgence

The SADC has been lackadaisical in its response to the insurgency in Mozambique and in so doing, is putting several other southern African countries at risk

EXCLUSIVE: OR Tambo’s forgotten speech at Chatham House

‘The choice we are faced with is to submit or fight’
Advertising

Ingonyama Trust Board moves to retrench staff

More than 50 workers at the Ingonyama Trust Board have been issued section 189 notices

No proof of Covid-19 reinfection, yet

Some people report testing positive for Covid-19 after initially having the disease and then testing negative. Scientists are still trying to understand if this means that reinfection is possible
Advertising

press releases

Loading latest Press Releases…

The best local and international journalism

handpicked and in your inbox every weekday