SA’s manufacturing production increased by 0.8% year on year in October, Stats SA reported on Tuesday, reversing the 0.8% drop recorded for September and breaking a two-month streak of underwhelming output.
Manufacturing generates billions of rand in export revenue, accounts for about 13% of GDP and creates a significant number of direct and indirect jobs.
Stats SA said the country’s manufacturing output was bolstered mainly by the petroleum, chemical products, rubber and plastic products sector, which is the largest growth contributor for a third month in a row, rising 4.5% and contributing 0.9 of a percentage point.
The food and beverages sector also benefited the data, rising 2.9% and contributing 0.7 of a percentage point. While its growth was not as high as the 9.5% rise reported for July, it outperformed the 1.2% uptick recorded for the sector in September.
The 2023 trend, in which packaged foods were among the top performers, is reflected in and highlighted by the Stats SA data.
In PwC’s October report, “Manufacturing Analysis 2024: Resolute. Resilient. Adaptable”, which details the financial and operational performance of SA’s major listed manufacturing companies, the food packaging sector was in the top three performers after pharmaceuticals and wood and paper manufacturers.
It reportedly attracted 13.41% of total manufacturing revenue, 8.4% of operating profit and 7.8% of operating cash flow.
“These subsectors generally remain resilient and defensive given the continued demand for food and healthcare products in the context of a growing population with evolving consumer need,” the PwC report reads.
Basic iron and steel, nonferrous metal products, metal products and machinery also recorded positive momentum, reporting a 2.7% rise to contribute 0.6 of a percentage point after a 5.4% decline in August. Seasonally adjusted, the division rose 3.6% in September.
The rise in output bodes well for the domestic steel industry, which has been facing weak demand, excessive logistics and energy costs and persistent imports.
However, not all manufacturing sectors recorded growth in October. The automotive sector continued as the biggest drag on overall growth, recording another month of declines in production.
The motor vehicles, parts and accessories, as well as other transport equipment divisions, had the largest negative impact with a 16.6% fall to narrow the 18% decline recorded in the previous month.
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 depressed consumer sentiment.
The industry also faces supply chain disruptions and poor ports management, prompting manufacturers to explore using alternative ports in neighbouring countries.
In addition, challenges with the local production for vehicles and components, environmental concerns and pressure to keep up with technological advances persist.
Seasonally adjusted manufacturing sales increased by 2.3% in October month on month, compared with September’s 1.1% fall and a 2.6% decline in August, Stats SA said.
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