Business Maverick


Green shoot: SA manufacturing output rises 4.6% year on year in March

Green shoot: SA manufacturing output rises 4.6% year on year in March
(Photo: Waldo Swiegers / Bloomberg via Getty Images)

Manufacturing production in South Africa rose a relatively brisk 4.6% in March compared with the same month in 2020. This raises the prospect that the GDP performance in the first quarter of 2021 may not be as bad as previously expected. It may also stem from manufacturers ramping things up ahead of the Eskom price hikes in April.

March was the first month since December 2020 that manufacturing output rose on a year-on-year basis, according to Statistics South Africa (StatsSA) data. The last month before that with a positive read was May 2019. The sector was in the doldrums even before the pandemic infected South Africa’s economy, hobbled on a range of fronts. 

Leading the way was the food and beverages sector, which gained 10.4%, and the motor vehicles, parts and accessories and other transport equipment component, which saw output surge 25.9%. 

A couple of things might explain the automotive bounce. One is that, in March 2020, the sector knew lockdown was looming and so it may have put the brakes on production in anticipation of curtailed demand when uncertainty ruled the day. In March 2020, it declined 13%, so the bounce was also off a relatively low base. Another driver may be the fact that there has been a shortage of spare parts, so the sector is now kicking into higher gear. 

For the power-intensive manufacturing sector overall, another factor was probably the more than 15% hike in Eskom power bills which kicked in from April. 

“Manufacturers have been pumping through extra volumes ahead of the April price hike in Eskom costs, so there may be pull-back in April. Where they could, they pushed. April also has a lot of public holidays,” Mike Schussler of told Business Maverick

This is also the latest data set that may bode well for the first quarter (Q1) GDP number, which just a few weeks ago was widely expected to show at least a slight contraction. The South African Reserve Bank, for example, in late March, in its most recent Monetary Policy Committee statement, forecast a 0.2% Q1 contraction after 2020’s 7% decline in GDP. 

“I think the first-quarter GDP number will be stronger than most expect… it will be a positive number looking at retail sales and other data,” said Schussler. Among other indicators, the Absa Purchasing Managers’ Index rose for a third straight month in March, and while it declined slightly in April, all of its sub indices were in positive territory. So the manufacturing bloodbath that saw a production decline of close to 50% last April may be coming to an end.” 

The Q1 GDP data will be unveiled on 8 June, and that will highlight the shade of green on this particular shoot. DM/BM


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  • Johan Buys says:

    It would be a LOT more than that if not for the lingering effect of factories not being able to source a very wide variety of inputs.

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