BUSINESS MAVERICK: Looting losses: South Africa’s manufacturing output declines in July

BUSINESS MAVERICK: Looting losses: South Africa’s manufacturing output declines in July

BM Ed ManufacturingMarch option 1


(Photo: Waldo Swiegers / Bloomberg via Getty Images)

On a monthly basis, a recent manufacturing slide picked up pace – a worrying trend indeed. Output in South Africa’s manufacturing sector fell by 4.1% in July this year compared with the same month in 2020, data unveiled by Statistics South Africa (Stats SA) showed on Thursday. This is clearly because of the unrest and looting that swept KZN and Gauteng in July, and is the latest data set to suggest that the economy contracted in the third quarter.

Ed Stoddard

On an annual basis, July was a sharp reversal from what was obtained in June, when manufacturing production rose by 11.9% compared with the same month in 2020. Another annual increase would have been expected, as last winter the economy was still climbing out of the pit that had been dug by the initial hard lockdowns sparked by the Covid-19 pandemic.

But the eruption of social unrest that followed the jailing of former president Jacob Zuma seems to have put paid to that. Compared with July of last year, production in the sector – one of the motors of the economy – fell 4.1%. Petroleum, chemical products, rubber and plastic products led the way, sliding by more than 23%.

One surprise was motor vehicles, parts and accessories and other transport equipment, which climbed 6.1%. This was despite the impact of the unrest, which saw Toyota close its Durban factory for more than a week. This is probably explained by the low base compared to last year and highlights the fact that the rebound would have been even bigger in the automotive sector were it not for the looting. 

On a monthly basis, a recent manufacturing slide picked up pace – a worrying trend indeed.

Seasonally adjusted manufacturing production fell by 8.0% in July 2021 compared with June 2021. This followed month-on-month decreases of 1.3% in June and 2.4% in July. So, production in the three months to the end of July dropped 5.5% compared with the preceding three months.

Coming in the wake of the slump into negative territory recorded by the RMB/BER Business Confidence Index in the third quarter (Q3), the manufacturing data suggest that the economy in Q3 is headed for a contraction.

“Should other sectors follow in the path of manufacturing, it would confirm our view of a 1.9% quarter-on-quarter contraction in GDP during Q3,” Pieter du Preez of NKC African Economics said in a note on the data.

A smaller economy – which means many people are poorer – is one of the consequences of the looting. DM/BM


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Ed Stoddard

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