JOHANNESBURG - Production capacity by South African large manufacturing companies fell by 1.8 percentage points in November 2020 as the industry was reeling from the effects of lockdown restrictions.
South Africa went through varying stages of lockdown restrictions last year with the less stringent coming around November, but demand still remained muted.
Data from Statistics South Africa (StatsSA) on Wednesday showed that the utilisation of production capacity by large manufacturers was 79.3 percent in November compared with 81.1 percent a year before.
StatsSA said the main contributor to slowing utilisation was “other reasons” such as downtime due to maintenance and changes in productivity, while insufficient demand fell by 0.4 of a percentage point
Eight of the ten manufacturing divisions showed decreases in utilisation of production capacity in November 2020 compared with November 2019.
The largest decreases were recorded in the furniture and ‘other’ manufacturing, basic iron and steel, motor vehicles, chemical products, and food and beverages categories.
Meanwhile, StatsSA said electricity production in December rose on a year-on-year basis for the first time since February 2020.
Electricity production increased by 1.1 percent in December following November’s 2.4 percent decline.
Similarly, consumption of electricity grew by 1.7 percent following nine consecutive months of declines.
For 2020 as a whole, StatsSA said electricity generation and distribution were however down 5.2 percent and 5 percent year-on-year, respectively.
Investec economist Lara Hodes said gross domestic product (GDP) was expected to have contracted by 7.3 percent year-on-year.
Eskom last week presented its plans to transform its electricity pricing structure to the National Energy Regulator of South Africa (Nersa) as it had last reviewed its tariff structure in 2012.
The power utility said tariff structures were outdated and needed to be modernised to reflect the changing electricity environment.
“Eskom continues to face unsustainable debt levels above R480 billion and remains a source of further contingent liability risk for the government, weighing heavily on the already constrained fiscus,” Hodes said.
BUSINESS REPORT