petrol price january 2020

Photo: AdobeStock

Manufacturing: Petroleum leads the slump in production and sales

A tough pill for the manufacturing industry to swallow.

petrol price january 2020

Photo: AdobeStock

On Thursday, Statistics South Africa released the figures for production and sales in the Manufacturing industry for June 2019 and petroleum led the line in the industry’s poor performance on a year-on-year basis.

Manufacturing: Sectors that performed poorly

As a whole, manufacturing production saw a decrease in June 2019. According to the stats authority, the industry closed off the observed month with a 1.5% decrease in production.

This is a -1.9% change compared to May. The only sector to maintain positive outputs was the food and beverage industry, which showed an increase of 3.7% in production and contributing a 1.0 percentage point towards the industry.

These are the sectors that performed poorly:

  • petroleum, chemical products, rubber and plastic products (-7,7% and contributing -1,7 percentage points);
  • basic iron and steel, non-ferrous metal products, metal products and machinery (-5,1% and contributing -1,0 percentage point); and
  • wood and wood products, paper, publishing and printing (-4,9% and contributing -0,5 of a percentage point).

June 2018 vs June 2019: Production and sales

Looking back at how the industry has performed in the past 12 months, observed from June 2018 to June 2019, one can draw worrying conclusions about how the slump in production and sales can affect our sluggish economy.

Manufacturing production fell by 3.2% in June 2019, compared to June 2018. The difficulty of pinpointing the exact cause of this slump in production makes it all the more difficult for sector players to address the issue.

Seasonally-adjusted performance

While the bigger picture paints a worrying outlook for manufacturing, it did show slight growth in seasonally-adjusted figures. Stats SA found that compared to the first quarter of 2019, manufacturing production and sales picked up by a meagre 0.6%.

This, for the most part, has to do with how the following sectors held the fort for the industry:

  • food and beverages increased by 1,6%, contributing 0,4 of a percentage point;
  • basic iron and steel, non-ferrous metal products, metal products and machinery increased by1,3%, contributing 0,2 of a percentage point); and
  • motor vehicles, parts and accessories and other transport equipment revved up by 3,4% and contributed 0,3 of a percentage point.