July manufacturing output hit by Covid-19 third wave and unrest

Manufacturing production declined 4.1% year on year in July compared with the same month last year, weighed down by weak output in the petroleum, chemical products, rubber and plastic products sectors, as well as food and beverages, according to Statistics South Africa (Stats SA).

Output had risen 11.9% year on year in June. 

Stats SA data released on Thursday showed that petroleum, chemical products, rubber and plastic products were the largest contributors to the decline, tumbling 23.2%. Food and beverages stumbled 2% for the period. 

The period under review takes into account President Cyril Ramaphosa’s extension of level four Covid-19 restrictions by an additional 14 days, from 11 to 25 July, as South Africa grappled with a third wave of the pandemic.

Added to that, in mid-July there were disruptions to supply chains, industrial output and demand for manufactured goods when parts of the country were rocked by looting, vandalism and arson, as what began as protests against former president Jacob Zuma’s incarceration for contempt of court degenerated into violence.

The largest positive contributors to the July factory output number were furniture and other manufacturing, which were up 41.2%, as well as basic iron, steel and metal products, which rose 3.6%. Motor vehicles and equipment climbed 6.1% year on year.

Seasonally adjusted manufacturing production decreased 8% in July compared with June. This followed month-on-month dips of 1.3% in June and 2.4% in May.

Recent data showed that the July purchasing managers’ index — another measure of economic activity in the manufacturing sector, sponsored by Absa — dropped sharply to 43.5 in July, from 57.4 the previous month. This was the steepest deterioration in business conditions since May last year, according to data platform Trading Economics

“Both business activity and new sales orders fell sharply, reflecting the negative impact of tighter Covid-19 restrictions that have hit leisure and hospitality sectors in particular, as well as civil unrest in some parts of the country,” Trading Economics said.

Anathi Madubela is an Adamela Trust business reporter at the M&G.

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Anathi Madubela
Anathi Madubela is a business journalist with a keen interest in the retail sector.

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