A report published by StatsSA has shown that manufacturing production in the country increased by 1.9% in November 2023 compared with November 2022, whilst seasonally adjusted manufacturing sales increased by 2.1% over three months.

With the manufacturing sector in South Africa taking a massive knock due to the Covid-19 pandemic, the country’s manufacturing output levels is said to be clawing its way back to pre-Covid levels. However, Investec said that despite November’s moderate annual growth, conditions in the manufacturing sector “remain lackluster”.

Manufacturing production

Rising 1.9% year-on-year (November 2022 compared to 2023), the largest contributions were made by:

• Wood and wood products, paper, publishing and printing (8% and contributing 0.8 of a percentage point);
• Motor vehicles, parts and accessories and other transport equipment (5.7% and contributing 0.6 of a percentage point).

The largest negative contributions were seen by:

• Food and beverages (-2.0% and contributing -0.5 of a percentage point);
• Basic iron and steel, non-ferrous metal products, metal products and machinery (-1.4% and contributing -0.3 of a percentage point)

Manufacturing sales

Seasonally adjusted manufacturing sales increased by 1,1% in November 2023 compared with October 2023. Overall, seasonally adjusted manufacturing sales had increased by 2,1% over three months ending November 2023.

This was a turnaround of month-on-month changes of -0,5% in October 2023 and -0,1% in September 2023.

The largest manufacturing sales contributions were made by:

• Motor vehicles, parts and accessories and other transport equipment (8,6% and contributing 1,4 percentage points);
• Petroleum, chemical products, rubber and plastic products (3,2% and contributing 0,7 of a percentage point). 

Analysis

According to the ABSA manufacturing survey for Q4.23, the index measuring confidence “has shown little improvement over the past three years and remains far below the long-term average of 37”. 

Additionally, South Africa’s numerous domestic challenges that include an inconsistent electricity supply and logistical constraints continue to impede optimal activity. “The intensity of load shedding was ramped up towards the end of November, while congestion at the ports will have weighed of the delivery of significant inputs.” said Investec.

“Moreover, the still subdued global manufacturing environment continues to undermine export potential,” the company added.

Thanda Sithole, FNB Senior Economist, said that “manufacturing output appears to have achieved marginal growth in 2023, marking a modest rebound from the 0.4% decline in 2022. In the near term, production is expected to remain lackluster, influenced by weak domestic and external demand, along with ongoing infrastructure challenges.”

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