Picture: Itumeleng English/African News Agency(ANA)
Picture: Itumeleng English/African News Agency(ANA)

Manufacturing output in all sectors goes into freefall as Covid-19 bites

By Siphelele Dludla Time of article published Jul 10, 2020

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JOHANNESBURG - Manufacturing output in South Africa tumbled by nearly 50 percent year-on-year in April and was expected to weaken even further during the year as demand struggled to recover to the pre-Covid-19 levels.

Data from Statistics South Africa (StatsSA) yesterday showed the production declined an unprecedented 49.4 percent from 5.5percent in March as the government’s strongest lockdown regulations curtailed activity.

StatsSA said the industry also produced far less in April compared with March, recording a 44.3percent month-on-month decline in activity.

Economic activity came to a halt in South Africa in April after the government imposed a hard lockdown with stringent restrictions to curb the spread of the coronavirus (Covid-19) pandemic.

StatsSA director of industry statistics Nicolai Claassen said all 10 manufacturing divisions registered sharp declines in April that had not been seen since the 2008 global financial crisis. “This was much worse than what we saw in the global economic crisis of 2008 to 2009,” Claassen said.

“The largest annual contraction in manufacturing output recorded then was also in April when production fell by 23.2percent year-on-year.”

The automotive industry was the hardest hit and recorded the biggest fall at 98percent slump in production as vehicle sales were prohibited in April.

The basic iron, steel and metal products sector recorded a 65.4percent decline.

Investec economist Lara Hodes said an analysis of April’s underlying data indicated that the decrease in production was broad based, with all sectors experiencing sharp declines.

Hodes said the basic iron and steel as well as petroleum and chemical products categories, which make up 41.76percent of manufacturing output, detracted a combined 22.7percent on the back of production declines of -65.4percent and -41.5percent year-on-year respectively.

“The return to pre-pandemic levels of output will likely take time,” Hodes said.

“Reliable electricity supply and the hastened implementation of crucial reforms by government remains paramount, however, uncertainty surrounding the global recovery, with second waves of infections resurfacing and restrictions being reinstated in some countries will continue to weigh on our domestic predicament."

BUSINESS REPORT 

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