SA’s manufacturing sector ended 2024 on a weaker footing with total annual production declining by 0.4% compared with 2023.
According to Stats SA’s latest data, manufacturing production decreased by 1.2% in December compared with the same month in 2023.
The decline was mainly due to a 6% drop in metal production, including iron, steel and machinery, and a 20.8% slump in the motor vehicle and transport equipment sector. Each sector reduced overall manufacturing output by 1.2 percentage points.
The decline was particularly severe in parts and accessories, which plummeted 25% year-on-year in December and a staggering 48.8% for the full-year.
A closer look at the data shows special purpose machinery recorded the steepest drop in plummeting by 35% year-on-year, while basic iron and steel products shrank by 9.3%.
“The manufacturing sector continues to face a number of challenges, domestically on the logistics front and internationally from subdued manufacturing conditions in a number of key trading markets,” said Investec economist Lara Hodes.
Hodes said that the lacklustre performance of the manufacturing sector was in line with the movement of the Absa purchasing managers’ index which slid further into contractionary territory at the end of 2024, with both the business activity and new sales orders indices declining.
However, the food and beverages sector helped offset the decline by growing 5.8% from the previous year and adding 1.7 percentage points to total output.
While the food and beverages industry remained the strongest performer, its growth was not evenly distributed across sub-sectors.
Meat, fish and fruit processing surged by 12.9% year-on-year in December, contributing significantly to overall manufacturing output. Similarly, beverages recorded a strong 10.1% increase. However, dairy products declined by 1.9%.
On a quarterly basis, seasonally adjusted manufacturing production fell 0.8% in the fourth quarter compared with the third, marking a sluggish end to the year.
Six of the ten manufacturing divisions reported negative growth over this period, with metals (-2.7%) and motor vehicles (-2.5%) again being the main drags.
“The vehicle parts and accessories category has declined year on year over the past few months,” Hodes said. “Confidence among new vehicle dealers is very subdued and dropped in the fourth quarter. If you look at Naamsa data, both domestic sales and export sales were down in 2024 compared to 2023.”
Manufacturing sales offered a brief reprieve in December, rising 1.4% compared with November’s sharp 2.9% decline and a 2.8% rise in October.
This suggests some manufacturers were able to clear backlogs or benefit from improved pricing dynamics, even as production volumes declined.
But while manufacturing sales rose 1.4% month-on-month in December, the full-year sales showed only a 2.9% increase compared to 2023, which is significantly lower than in past years.
Unsurprisingly, in the fourth quarter as a whole, sales were down 0.4% compared with the third quarter, highlighting persistently weak demand in several key industries.
The largest positive contribution was made by the motor vehicles, parts and accessories and other transport equipment division (3.1% and contributing 0.5 of a percentage point).
In 2024, overall manufacturing output fell by 0.4% compared to 2023. The biggest declines were in the motor vehicle and transport equipment sector, which dropped 13.3% (cutting 1.2 percentage points from total output), and the metal and machinery sector, which shrank 2.9% (reducing output by 0.6 percentage points).
On the upside, food and beverages grew 3.7% (adding 0.9 percentage points), while petroleum, chemical products, rubber and plastics increased 2.6% (adding 0.5 percentage points), helping to soften the sector’s overall contraction.
While 2024 saw some fluctuations in production, the overall trend remains below pre-pandemic levels.
Hodes said: “Indeed, some respondents noted that conditions in December 2024 were worse than usually seen in December, while export sales dropped sharply and fell back to levels last seen in the first half of 2024, with manufacturing conditions in a number of key countries globally still subdued.”
However, she noted that the index for anticipated business conditions in six months is expected to indicate growth, “indicating that participants in the manufacturing sector still remain somewhat positive about business conditions” amid global uncertainty.
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