SA’s manufacturing production slipped 1.2% year on year in August, mainly as a result of plunging vehicle production, Stats SA said on Thursday.
The automotive sector, which includes motor vehicles, parts and accessories, slumped 16.1%, contributing to a 1.6 percentage point drop in overall manufacturing output.
Seasonally adjusted manufacturing production was also lower, easing 0.6% month on month in August after an increase of 1.6% in July and no change in June.
Over the three months leading up to August, manufacturing production rose a modest 0.1%, with four of the 10 segments divisions reporting growth.
The automotive industry is a crucial sector in the SA economy, contributing 5.3% to GDP, 3.2% of that from manufacturing and 2.1% from retail.
According to the Automotive Business Council, Naamsa, the value of the sector’s reached a record R270.8bn in 2023, accounting for 14.7% of the nation’s total exports. Nonetheless, current trends point to challenges, with vehicle and component exports to more than 140 markets being affected by declining domestic sales, Naamsa said.
Seasonally adjusted manufacturing sales also experienced a 1.8% decline in August compared to July 2024. Stats SA said the motor vehicle sector was again the main drag, declining 3.5%.
The basic iron and steel sector faces its own challenges. The broader steel market is grappling with decreased consumption and persistent operational issues, including power supply constraints and transportation inefficiencies.
Stats SA said the output of basic iron and steel, non-ferrous metal products, metal products and machinery sectors fell a combined 5.4% in August. That accounted for a 1.2 percentage point decline in overall manufacturing production.
The struggles of the steel industry are evident in the performance of ArcelorMittal SA (Amsa). The country’s biggest steel producer, reported a loss of R221m before interest, tax, depreciation and amortisation charges, despite showing some improvement from the previous year.
The company continues to face operational challenges, particularly at its Vanderbijlpark blast furnaces, but has committed to preserving 3,500 jobs in its long-steel business, aiming to stimulate local demand.
“August’s dip in output is in line with the movement in the Absa Purchasing Managers’ Index, which moved back into contractionary territory in August, with a reading of 43.6 (from 52.4 previously),” said Investec economist Lara Hodes.
“Both the business activity and new sales orders’ indices fell considerably during the month following ‘a significant improvement in July when some sales orders that had been on hold due to political uncertainty started to come through’, according to the BER,” Hodes added.
“In addition to the subdued domestic economy, a lacklustre global manufacturing environment continues to weigh on export potential. According to the JPMorgan Global Manufacturing PMI survey, ‘Signs of weakness continued to build in the global manufacturing sector during August,’ while ‘global trade flows deteriorated for the third month in a row’,” Hodes said
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