Manufacturing production decreased by 3.5% year-on-year in September, Statistics South Africa reports.

The largest negative contributions came from motor vehicles, parts and accessories and other transport equipment (-15% and contributing -1.1 percentage points); wood and wood products, paper, publishing and printing (-11.2% and contributing -1.1 percentage points); furniture and ‘other’ manufacturing (-19% and contributing -0.8 of a percentage point); and basic iron and steel, nonferrous metal products, metal products and machinery (-3.7% and contributing -0.8 of a percentage point).

Seasonally adjusted manufacturing production was flat in September, compared with the previous month, following month-on-month changes of -3% in August and 2.1% in July.

Seasonally adjusted manufacturing production increased by 0.9% in the third quarter of this year compared with the second quarter.

Five of the ten manufacturing divisions reported positive growth rates over this period.

The largest positive contributions came from food and beverages (4.9% and contributing 1.2 percentage points); and basic iron and steel, nonferrous metal products, metal products and machinery (1.2% and contributing 0.3 of a percentage point).

Meanwhile, seasonally adjusted manufacturing sales decreased by 2.2% in September compared with the previous month, following month-on-month changes of 1.3% in August and 4.8% in July.

Seasonally adjusted manufacturing sales increased by 3.2% in the third quarter, compared with the second quarter.

The largest positive contributions came from motor vehicles, parts and accessories and other transport equipment (10.9% and contributing 1.5 percentage points); petroleum, chemical products, rubber and plastic products (4.4% and contributing one percentage point); and food and beverages (3.4% and contributing 0.9 of a percentage point).

Financial services firms FNB and WesBank senior economist Thanda Sithole says the near-term outlook for manufacturing remains challenging.

“Elevated production costs, exacerbated by geopolitical tensions in the Middle East and their implications for domestic fuel prices, continue to weigh on operating conditions. Domestic and external demand conditions also remain relatively subdued.

“Although electricity supply has stabilised, cumulative tariff increases remain a structural cost constraint, while improvements in port and rail operations have been gradual, with logistics inefficiencies continuing to impede economic activity,” he cautions.

However, Sithole expects manufacturing to gradually benefit from improving foundations for economic growth, ongoing structural reforms and government’s commitment, in partnership with the private sector, to address infrastructure backlogs through capital replacement and renewal.

“The pace and effectiveness of these interventions will be important in determining the sector's recovery and its ability to contribute more meaningfully to economic growth and employment creation,” he emphasises.