PRODUCTION FIGURES
SA manufacturing output falls 1.1% in year to November
The annual decline was the first since July, a worrying sign that the surge in rolling blackouts is dimming a sector that is power-intensive.
Output in the domestic manufacturing sector fell by 1.1% on an annual basis in November 2022, data released by Statistics South Africa showed on Tuesday. But a 2% spurt in production compared to October signals the sector is not completely on the ropes.
The annual decline of 1.1% was the first since July, a worrying sign that the surge in rolling blackouts is dimming a sector that is power-intensive. You simply can’t make stuff without electricity unless you revert to earlier models of production.
Still, markets had expected a much worse number, with the Bloomberg consensus forecast pegging a 3.5% decline.
On a monthly basis, there was a 2% bounce in November after a 6.2% fall in October. This indicates that the sector may have been overwhelmed by the outages in October, but the November spurt was off a low base after the tumble the previous month.
There are still some green shoots in the face of an array of challenges.
The motor vehicles, parts and accessories component of the industry saw a 13.4% rise in production in November as the global and domestic auto sectors slowly shift into a higher gear.
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After a recovery in the 2021 domestic new vehicle market — increasing year-on-year by 22.2% to 464,493 units, compared to the 380,206 units sold during 2020 — total new vehicle sales recovered further by 13.9% to 528,963 units in 2022, industry body Naamsa said on Monday. That 2022 total was still 1.4% below 2019.
Vehicle export sales also maintained their rebound, with a 17.9% increase in 2022 compared to 2021 to 351,450. So the manufacturing numbers would be even worse were it not for the performance of the automotive sector, which points, among other things, to the release of pent-up demand.
By contrast, sectors that have seen declining production include food and beverages, which fell by 2.5% year-on-year in November. It’s probably not a good sign if South Africans are eating and drinking less.
The Absa Purchasing Managers’ Index (PMI), a key barometer of the health of South African manufacturing, rose for the third straight month in December, edging up to 53.1 from 52.6 in November. That points to some resiliency, but it’s hardly in the fast lane.
The business activity index has not been above the neutral 50 mark since March 2022, a clear sign of underlying weakness. And with no signs of the rolling blackouts crisis abating and a slowing global economy, South Africa’s manufacturing sector faces a tough and uncertain 2023. DM/BM
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