The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) expressed concerns about the slow recovery of the country’s manufacturing sector and high electricity tariffs. South Africa’s Manufacturing PMI was at 50.9 for January, which is lower than the 2020’s Q4 average while up from 50.3 in December.
According to the Bureau for Economic Research, the business activity index declined for a fourth consecutive month in January, which flags a loss of the momentum of recovery. South Africa’s manufacturing sector is facing a steep rise in electricity charges while the price of manufactured goods is rising at a slower pace. In Q4, prices of mining products increased more than both electricity and intermediate manufactured goods.
The sub-indices representing sales orders and business conditions improved indicating growth in the next six months. Though on-premises manufacturing showed slight improvement, January’s reading is much lower than the average of the December quarter, showing a slower pace of recovery.
SEIFSA Chief Economist Chifipa Mhango stated since January 2013, prices for both final manufactured goods and intermediate products have shown average annual price rise below 10pc. While industries like mining and steel production showed a steeper increase pushing up input costs. He alarmed this situation could lead to a negative effect on turnover and consequently shutting down businesses and more job losses in the short to medium term.
In 2020, Africa produced 17.2mn mt of crude steel similar to 2019 production volume, according to World Steel Association data.