SA’s manufacturing production fell an annualised 0.8% in September, according to Stats SA, marking the second consecutive month of underwhelming output.
The motor vehicles, parts and accessories, and other transport equipment sector were the main culprits, falling 18.7% and accounting for 1.7 percentage points of the overall decline. This maintained the downward trend reported in August when industrial production decreased by 1.2% year on year.
On a monthly basis seasonally adjusted manufacturing production was unchanged from August, Stats SA said. That follows a monthly decline of 0.7% in August 2024 and 1.7% growth in July 2024.
However, Stats SA said petroleum, chemical products, rubber and plastic products made the biggest positive contributions in the month, rising 3.1% and contributing 0.6 percentage point to the overall number.
The food and beverage sector also registered a 1.2% uptick, contributing 0.3 percentage point.
Seasonally adjusted manufacturing production rose 0.2% in the third quarter of 2024 compared with the second quarter of 2024. Three of the 10 manufacturing divisions reported positive growth rates over this period, Stats SA said.
The largest positive contribution was reported for the basic iron and steel, non-ferrous metal products, metal products and machinery division (3.6% and contributing 0.8 percentage point).
The largest negative contribution was reported for the motor vehicles, parts and accessories and other transport equipment division, which fell 5.7%.
Even when seasonally adjusted, the Stats SA data shows motor vehicles, parts and accessories, and other transport equipment sectors accounted for most of the decline.
SA’s automotive industry faces several challenges, including the growing global transition to more environmentally friendly electric and hybrid vehicles — which have experienced slow uptake domestically — and a sluggish economy characterised by high interest rates and inflation, and consequently depressed consumer sentiment.
The industry also faces supply chain disruptions with poor port management prompting manufacturers to explore using alternative ports in neighbouring countries. In addition, challenges with local production for vehicles and components, environmental concerns and pressure to keep up with technological advances persist.
The reported September decline mirrors data released by motor industry body Naamsa, which shows new vehicle sales in SA experienced another modest decline of 4.1% to 44,081 units in September, driven mostly by continuing weakness in the light commercial market.
Sales of light commercial vehicles, including bakkies and minibuses, fell 17.1% year on year in September to 10,914 units. Much of that decline was due to sales of the Toyota Hi-Ace taxi dropping to 386 units last month compared to 1,421 in September 2023, as banks tightened their lending criteria in response to a surge in bad debts.
Naamsa said that in a year marked by economic fluctuations, year-to-date sales declined 5.8% to 401,169 units compared to the January-September period in 2023.
The recent easing of interest rates is set to offer hard-pressed consumers some relief, though food and beverage manufacturers have been able to pass on price increases and maintain or expand sales.
In May SA's largest food producer, Tiger Brands reported it had managed to lift its interim earnings marginally, recording strong double-digit revenue growth even as topline growth struggled amid sliding volumes.
Close competitor and branded consumer products manufacturer AVI delivered a strong annual performance for the year to end-June, with double-digit growth in operating profit, gross profit, headline earnings per share and dividends.
This was largely thanks to the group implementing price increases in all categories to offset cost increases while it reported that its gross margins recovered to pre-Covid levels.
AVI declared a final dividend of 388c a share, taking its total normal dividend for the year to 590c — a jump of 22.4% over the prior financial year. In addition, the group paid out a special dividend of 280c a share.
GDP and its components are estimated using the volume of manufacturing production indices, which are then used to create and track government policies, based on the findings of the monthly manufacturing production and sales survey.
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