Manufacturing in South Africa continues its slide, dropping by 2.1% in February following an upwardly revised 4.2% slump in January. 

Some sectors did decrease their declines by big proportions, with food and beverages declining by a smidgeon compared to a 6.1% decline in January. Likewise, petroleum, chemical products, rubber and plastic products pared their decline, dropping by 8.4% in February compared with a 14.1% drop in January. 

The hero of the hour was the motor vehicles, parts and accessories category, which rose by 13.2% and was a significant positive contributor, pulling the entire series up by more than a percentage point.

Manufacturing in SA blipped positive in December, but apart from that, it has declined every month for the past 18 months, recording massive declines during the lockdown period.

Virág Fórizs, emerging markets economist at Capital Economics, said in a note to clients that the road to recovery in South Africa’s manufacturing sector “will probably be slow and bumpy”.

“Weak domestic demand and persistent power cuts will act as key headwinds, although export-oriented sectors are likely to benefit from a continued rebound in external demand,” he said.

Looking ahead, external demand will probably hold up as trade partners’ economies continue to rebound in the coming months. 

“There were some encouraging signs in the latest manufacturing PMI [Purchasing Managers’ Index] reading. But a slow vaccine roll-out, continued power cuts and fiscal austerity will weigh on domestic demand,” said Fórizs.

“Overall, we wouldn’t hold our breath for a rapid recovery in manufacturing output this year.” DM/BM