South African manufacturing output rose by 3.7% in the year to July, Statistics South Africa (Stats SA) said on Thursday. This followed three consecutive months of year-on-year decline, but it came off a low base — July last year was marked by a violent surge of social unrest and rioting — and on a monthly basis, output declined by 0.2%. The sector may be regaining some traction, but remains in a rut. 

Growth of 3.7% compared with July of last year is hardly cause for celebration. In July 2021, manufacturing output tanked by 4.1% on a year-on-year basis as the sector was rocked by the wave of rioting and violence after the jailing of disgraced former president Jacob Zuma. 

Compared with June this year, output declined by a marginal 0.2% and in the three months to July by 4.2%, Stats SA said. Rolling blackouts remained intense into July, extracting a continued toll on the economy, while logistical bottlenecks remain a burden. 

The sector’s woeful performance in the second quarter (Q2) — partly as a result of the KZN floods in April — was a key reason behind the 0.7% contraction in the overall gross domestic product (GDP) in that time frame, and any hopes for wider economic growth this quarter to avoid a recession will hinge on manufacturing. A recovery is anticipated, but let’s just say South Africa is hardly on its way to becoming a new China when it comes to making stuff.  

“Although load shedding remains a risk and input costs are only gradually receding, manufacturing PMI signals a recovery in output in Q3. Manufacturers expected business conditions to have improved in August and signalled optimism over the six-month horizon,” FNB senior economist Thanda Sithole said in a note on the data.

“We expect manufacturing output growth to average around 1.0% this year, reflecting a material deterioration from the 6.5% cyclical rebound in 2021.” 

So, the sector is seen to be picking up some steam but is hardly going to propel economic growth to the levels that many economists say are needed to make a dent in an unemployment rate of almost 34%. DM/BM