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This page's sole purpose is to provide readers with news, information, interactive charts and graphics regarding South Africa's manufacturing industry. The page will be updated on a ad hoc basis as more data becomes available. The main source of data is Statistics South Africa (Stats SA), manufacturing related survey results. We will take a look at various sectors within the manufacturing industry, volumes produced as well as the relative contribution of the manufacturing industry to South Africa's economy. |
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14 January 2021: Manufacturing production for November 2020
Manufacturing production decreased by 3,5% in November 2020 compared with November 2019. The largest contributions were made by the following divisions: Seasonally adjusted manufacturing production decreased by 1,3% in November 2020 compared with October 2020. This followed month-on-month changes of 3,2% in October 2020 and 2,8% in September 2020 Seasonally adjusted manufacturing production increased by 8,9% in the three months ended November 2020 compared with the previous three months. All ten manufacturing divisions reported positive growth rates over this period. The largest contributions were made by the following divisions:
petroleum, chemical products, rubber and plastic products (-9,6% and contributing -2,1 percentage points);
food and beverages (-2,9% and contributing -0,9 of a percentage point); and
basic iron and steel, non-ferrous metal products, metal products and machinery (-3,9% and contributing -0,7 of a percentage point)
food and beverages (7,9% and contributing 2,5 percentage points);
motor vehicles, parts and accessories and other transport equipment (30,3% and contributing 1,9 percentage points);
basic iron and steel, non-ferrous metal products, metal products and machinery (7,4% and contributing 1,4 percentage points); and
wood and wood products, paper, publishing and printing (12,6% and contributing 1,3 percentage points) –
Seasonally Adjusted Volume of Manufacturing Production in South Africa up to November 2020
31 March 2020: Large manufacturers in South Africa struggling
Large manufacturing companies in South Africa are struggling. Lack of demand for goods in South Africa, unreliable power supply from ESKOM and the continued use of imported products instead of locally manufactured goods all factors dragging down the local manufacturing industry. Below the year on year growth a few of the income statement items for large man
- Turnover -9.10%
- Interest -17.61%
- Dividends -57.96%
- Royalties, franchise fees, copyright, trade names and trade and patent rights -23.81%
- Rental/leasing of land, buildings and other structures received -64.04%
- Hiring/leasing of plant, machinery, vehicles and other equipment received -4.70%
- Profit on assets/investment sold or revalued -38.49%
- Other income -42.07%
- Total income -10.60%
So over the course of the last 12 months large manufacturers recorded a decline in their total income earned of -10.6%. Another concerning number is the fact that profit on assets/investments sold or revalued declined by almost 40% over the course of the year. This category items such as holdings in other companies, assets the group might have planned to sell at a profit at a later stage, assets no longer required that they had to sell etc. And to see a decline that big, it has to have a significant impact on the balance sheets of these firms.
16 March 2020: Manufacturing of various steel products in South Africa
The image below shows the values (in Rand millions) for various iron, metal and steel products manufactured and sold in South Africa. In the past basic iron and steel products contributed the most to sales of the three categories looked at in this update, but in recent months non ferrous metals value of goods manufactured and sold contributed more to sales than basic iron and steel products.
As at January 2020 the sales values of the various groups amounted to the following, sorted from highest sales value to lowest sales value:
- Non-ferrous metal products: R13 101 288 000
- Basic iron and steel products: R8 697 992 000
- Structural metal products: R3 107 482 000
28 January 2020: Wage inflation in South Africa's manufacturing industry
Yesterday we estimated the wage/salary inflation of various sectors of the South African economy by looking at gross earnings of the various sectors as well as the number of employees in each sector. The earnings was divided by the number of employees and an estimated average wage per person was calculated. This was done for a number of quarters. The corresponding quarters of various years where then compared to one another in order to estimate an annual rate of wage inflation in South Africa. The image below shows the year on year wage inflation in South Africa's manufacturing sector.
What is clear from the image above is the fact that the wage rate inflation growth in South Africa's manufacturing industry has been declining significantly over the last couple of years, and at its current year on year rate of 5.4% it is at least still higher than the consumer price index (CPI) inflation which came in at 4% for the period ending December 2019. So the real increase in wages in the manufacturing industry was roughly 1.4% towards the end of the year.
11 November 2019: SA manufacturing under utilization rises to highest levels in 4 years
In a economy where things seems to stumbling along slowly it is no real surprise to find that the manufacturing under utilization of South African manufacturers have increased. Basically what this is saying local manufacturing firms are using less and less of their full capacity. The graphic below shows the quarterly manufacturing under utilization for South Africa's total manufacturing industry from the 4th quarter of 2013. And the current level of manufacturing under utlization is sittingat 19.7%. What this is saying is that about 1 fifth of South Africa's manufacturing capacity is not being used right now.
The last time South African used so little of available manufacturing capacity was 4 years ago. And looking at the main reasons as to why South African manufacturers are not producing at full capacity. the 19.7% under utilization can be ascribed to the following reasons according to Statistics South Africa.
- Reason for under-utilisation: Insufficient demand: 12.4%
- Reason for under-utilisation: Other reasons: 3.6%
- Reason for under-utilisation: Raw materials 2.5%
- Reason for under-utilisation: Skilled labour: 1%
- Reason for under-utilisation: Semi- and unskilled labour: 0.2%
- Total Under-utilisation: 19.7%
So it is pretty clear that the main reason our manufacturing industry is not producing at full capacity is due to insufficient demand. This might be due to a weak economy or due to increased imports which reduces the need for manufacturing in South Africa
3 October 2019: Contribution to income and employment inmanufacturing
In a report covering manufacturing by Statistics South Africa we found the following graphic rather telling. What it highlights is the low income earnings by the clothing and textiles industry. We highlighted cheap clothing imports before as a reason for the woes in the textile and clothing industry in South Africa. Below the graphic and discussion regarding the graphic as obtained from Statistics South Africa
The division with the highest proportion of employment compared with its proportion of income was ‘textiles, clothing, leather and footwear’ (7,2% of employment and 2,3% of income), followed by ‘glass and other non-metallic mineral products’ (contributing 5,9% of employment and 3,2% of income), and ‘electrical machinery and apparatus’ (4,0% of employment and 2,3% of income). Although the ‘co*ke, petroleum, chemical products, rubber and plastic’ division contributed 25,5% of the total income of the manufacturing industry in 2017, its contribution to employment was only 15,3%. The ‘transport equipment’ division had the highest proportion of income compared with its proportion of employment (based on the ratio of the proportions) (17,9% of income and 9,3% of employment)
14 August 2019: Value of South Africa's manufacturing sales over the last year
We take a look at the latest manufacturing production and sales numbers published by Statistics South Africa and focus on the value of sales over the last year. Month Sales values Year on year growth In June 2019 the manufacturing industry in South Africa sold goods to the value of R203.7 billion compared to South Africa's total imports ofR 103 754 352 076. Thus the manufacturing to total imports ratio is currently sitting at (1.97). So basically for every R1 in goods manufactured locally, 50.7c is imported
Jun-18: R 191 557 184 000 6.11%
Jul-18: R 196 460 817 000 9.18%
Aug-18: R 196 356 816 000 7.64%
Sep-18: R 201 095 627 000 10.74%
Oct-18: R 202 552 057 000 11.27%
Nov-18: R 201 153 730 000 4.89%
Dec-18: R 197 406 269 000 5.31%
Jan-19: R 201 519 371 000 9.17%
Feb-19: R 199 006 001 000 5.99%
Mar-19: R 201 339 607 000 7.30%
Apr-19: R 206 869 442 000 15.21%
May-19: R 200 463 705 000 3.92%
Jun-19: R 203 734 151 000 6.36%
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6 August 2019: Reasons for the under utilization of South Africa's manufacturing capacity
In today's update we take a look at the main reasons why South Africa's manufacturers are not running at full capacity right now. The latest numbers regarding South Africa's manufacturing capacity shows that South African manufacturing production was running at 81.3%. Thus a 18.7% under utilization of available manufacturing capacity. So why are we not producing at full capacity? The bar chart below shows the percentage contribution of the main reasons for the under utilization of manufacturing capacity for Q2: 2017, Q2: 2018 and Q2:2019.
From the bar chart it is clear that the main reason South Africa's manufacturers are not running at full speed is the lack of demand. with lack of demand contributing 62.2% to the reasons for under utilization. On contrast the availability of unskilled and semi-skilled labour contributes only 1% of the reason for under utilization. This is due to the fact that South Africa has a large amount of unskilled and semi-skilled labourers. Skilled labour contributes 5.3% (or 5 times the amount of unskilled labour) to the reasons for under utilization of production capacity. The summary below shows the percentage of under utilization of production capacity over the last couple of years:
- Q2:2016: 18.6%
- Q2:2017: 19.1%
- Q2:2018: 19.3%
- Q2:2019: 18.7%
So under utilization in Q2:2019 is a little better than that reported in 2018 and 2017 but with one fifth of production capacity lying idle one cannot help but wonder about the underlying health of the South African economy.
30 June 2019: South African Reserve Bank's view on manufacturing in South Africa
We take a look at the South African Reserve Bank (SARB) opinion on the South African manufacturing industry as contained in their latest quarterly bulletin update. Below the opinion of the SARB on South Africa's manufacturing industry. "
"Manufacturing production was adverselyaffected by frequent electricity-supply shortages, higher input prices – in particular fuel – andweak domestic demand. In addition, the demand for manufactured exports weakened as globalmanufacturing production slowed amid ongoing international trade tensions. The seasonallyadjusted utilisation of production capacity in the manufacturing sector increased slightlyfrom 81.4% in November 2018 to 81.7% in February 2019, while business confidence amongmanufacturers remained weak. Despite the contraction in the first quarter of 2019, the level ofreal manufacturing output was still 0.6% higher than in the corresponding period of 2018."
The above ties in with our article from the 26th of June in which we discussed the number of employees in the clothing and textiles industry in South Africa and it shows how volumes producedin the textiles, clothing, leather and footwear industry has declined since 2014, and its hardly surprising considering the fact that on average over the last decade in this industry 577 people lose their jobs every single quarter.
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26 June 2019: Number of employees in the clothing and textiles industry in South Africa
A few weeks ago we covered the imports of clothing and textiles into South Africa and how the practice of importing cheap clothing from mostly Asian countries such as China, India and Vietnam hurts the local industry. Today we take a look at the number of people formally employed in the clothing and textiles industry in South Africa over time. The graphic below shows the the number of formal sector employees employed in the clothing and textiles industry in South Africa as measured by Statistics South Africa's quarterly employment survey (QES).
As the graphic shows employment in the clothing and textiles industry in South Africa has been in steady decline since the early part of 2009, and the long term trend is a continued decline in the number of employees formally employed in this sector in South Africa. These are the types of sectors the South African government should look to support if it wants to put a halt to the ever increasing unemployment rate in South Africa, which is currently very close to record high levels.
On average over the last decade, 577 people lose their job in the clothing and textiles industry in South Africa every quarter. So that works out to 192 people losing their jobs in the clothing and textiles industry every month in South Africa. So just more than 6 people per day lose their jobs in the clothing and textiles industry in South Africa
12 June 2019: Manufacturing production perks up in April 2019
Manufacturing production volumes (seasonally adjusted to remove the effects of seasonal fluctuations) perked up significantly in April 2019 when compared to April 2019. The line chart below shows the year on year growth rates since January 2017 for Total manufacturing production volumes in South Africa as published by Statistics South Africa
The above is good news for South Africa's struggling manufacturing sector which as we showed below (4 June 2019) showed significant declines in the first quarter of 2019 when compared to the last quarter of 2018. This industry which used to make up around 20% of South Africa's total economy in 1994, now makes up under 14% of South Africa's economy as South African firms and firms operating in South Africa import more and more final manufactured goods, leading to less demand for locally produced goods. The South African government should focus on improving its buy "proudly South African" goods and make local consumers aware of the fact that a lot of the goods being bought is manufactured outside of South Africa and this is leading to jobless in the local industry. More aware and activist buying in South Africa could save local industries, and in this way some form of protectionism can be implemented without the SA government having to impose tariff on countries. South Africans just need to be more aware of the origins of the goods they are buying. And demand more locally produced and sourced goods.
4 June 2019: Manufacturing industry declined significantly from Q4:2018 to Q1:2019
Statistics South Africa published the latest economic growth (GDP) numbers for the first quarter of 2019 and the picture it painted of the South African economy was a dismal one. South Africa's economy contracted by -3.2% in the first quarter of 2019, when compared with the fourth quarter of 2018. And one of the biggest decliners of the main sectors in the South African economy was the manufacturing industry.
Growth rate of South Africa's economic sectors for quarter 1 of 2019
The image above shows the quarter on quarter annualised and seasonally adjusted growth rates per sector for the South African economy during the first quarter of 2019. And as can be seen from the picture the manufacturing industry was one of the worst performers of all the sectors in the South African economy with it decline by -8.8% quarter on quarter annaulised. Almost 3 times as much as the overall decline in economic growth for the same period. Basically showing manufacturing was one of the main drags on the South Africa economy. It was predicted that manufacturing will decline in Q1:2019, due to slowing demand in South Africa's sluggish economy and the fact that loadshedding that returned during Q1:2019 limited local manufacturers ability to produce more goods.
3 June 2019: Sentiment in manufacturing industry on the decline
Bloomberg news is reporting that sentiment in the manufacturing industy is on the decline. The Bloomberg news article, as published on Fin24 said the following. A gauge measuring sentiment in South Africa’s manufacturing industry declined in May, extending its worst start to a year since the financial crisis. Absa Group’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, fell to 45.4 from 47.2 in April, the Johannesburg-based lender said in an emailed statement Monday. The reading missed the 48 median estimate of six economists in a Bloomberg survey. Key Insights
Weakness in factory output, which contributes about 14% to gross domestic product, adds further pressure to South Africa’s attempt to recover from last year’s recession and, with a slump in mining, suggests another poor quarter after an expected contraction in the first three months. The index has been below the neutral 50 mark every month this year, making this its worst start since 2009.The statistics agency releases GDP data Tuesday, with the median estimate in a Bloomberg survey of 14 economists showing an expected 1.6% contraction in the first quarter from the previous three months.
The sub-indexes for purchasing prices, business activity, inventories and new-sales orders declined.The index tracking expected business conditions in six months’ time remained unchanged at 62.3, Absa said. "This is more than 4 points above the average recorded during 2018, which means that respondents remain fairly optimistic that conditions will improve going forward."
16 May: Manufacturing production Q1:2019 vs Q1:2018
While our update on 13 May 2019 focused on total manufacturing production numbers and year on year growth rates in manufacturing, this update will take a look at the total production numbers for quarter 1 of 2019 and compare it to the total production numbers of quarter 1 of 2018.
The image above, obtained from Statistics South Africa shows that total manufacturing production for Q1:2019 declined by -2.4% when comparing the numbers to Q1:2018. The major movers to the up and down side are shown below:
Positive:
Negative:
- Motor parts and accessories: -13.7%
- Footwear: -14.7%
As we mentioned in a earlier update, we are concerned about the number of vehicles and parts being manufactured in South Africa of late. Part of the reason for this is sluggish demand in RHD vehicle markets which SA manufactures vehicles for. In South Africa for example, new vehicle sales have been struggling for months now, and demand in Australia and the UK is relatively sluggish too. Worries about loadshedding in Q1 and the impact it will have on our GDP numbers has been raised. And looking at these numbers we suspect part of the decline in production numbers is due to loadshedding. But without manufacturers being explicitly asked about the impact load shedding has had on production numbers it is hard to quantify the exact extent of the impact of load shedding on manufacturing production as well as on overall GDP numbers.
13 May: South Africa's total manufacturing production up to March 2019
We take a look at the latest manufacturing production numbers published by Statistics South Africa and we focus on total manufacturing production (seasonally adjusted). In our update of 2 May 2019 below we showed that South Africa is only using about 815 of its manufacturing capacity and capabilities, and in today's update we will show how sluggish the year on year growth in manufacturing production has become in recent years.
The graphic above shows the index level of seasonally adjusted total manufacturing (the black line graph) and left hand axis, and it shows the year on year growth in manufacturing production (the red bar chart and right hand axis). And as the graphic shows the heights reached by the red bar chart in 2011/2012 saw year on year growth in manufacturing at levels well above 5% on numerous occasions. But in 2017 and 2018 the year on year growth in manufacturing production has declined substantially. A few reasons for this:
- Sluggish local demand for locally produced goods
- Poor international demand for South African manufactured goods. We tend to export more raw materials and commodities than manufactured goods
- Continued growth in the imports of manufactured goods instead of buying from local producers (due to cheap imports from countries such as China). See our Trade Data page for more on SA trade with the rest of the world.
- Lack of stable and relatively cheap electricity supply. SA has some of the most expensive power in the world these days due to all the ESKOM tariff hikes over the years and the mismanagement at ESKOM leading to ad hoc rolling black outs.
The manufacturing industry in South Africa is in decline, and it has been for years. In 1994 manufacturing accounted for roughly 20% of South Africa's GDP, it is currently sitting at around 14% of GDP and the decline continues.
2 May 2019: Utilisation of production capacity by large enterprises for Feb 2019
We take a look at the latest manufacturing utilisation of production capacity numbers as published by Statistics South Africa. What this shows is at what speed and capacity South Africa's manufacturing industry is running at. Are we producing at maximum capacity? Or is there slack in capacity and we not utilising all the capacity available to us? So for the month of February 2019 South African utilisation of available production/manufacturing capacity was sitting at 80.8%, thus we were not using 19.2% of our available production capacity. So what were the reasons for not using the available production capacity?
- Reason for under-utilisation: Raw materials: 1.9%
- Reason for under-utilisation: Skilled labour: 1%
- Reason for under-utilisation: Semi- and unskilled labour: 0.2%
- Reason for under-utilisation: Insufficient demand: 12.1%
- Reason for under-utilisation: Other reasons: 4%
So the bulk of the 19.2% of under utilisation was made up by insufficient demand, which made up 12.1% of the 19.2% (thus insufficient demand contributed 63% of total under utilisation of manufacturing capacity in South Africa. Another clear sign of the economic trouble South Africa is in. with lacking demand, manufacturing cant grow, retail and wholesale sales cannot grow and essentially the economy is spinning its wheels. It's as if it is stuck in the mud and cannot get out. Demand has to be stimulated (hard when consumers are drowning in debt and interest rates are increased). Government is looking to curb its spending as a lot of their spending is funded by debt. So basically monetary and fiscal policy right now are contractionary, which is the opposite of what is required to stimulate demand and growth in the economy. But it might be a while before South African's see expansionary monetary and fiscal policy in SA. And sadly this is what is needed right now to kick start South Africa's economy,
16 April 2019: Growth in manufacturing mixed
It is often said that the devil is in the detail. Statistics South Africa recently released the latest manufacturing production numbers for South Africa, for the month of February 2019. But one will be excused if one is confused by the numbers released. Lets take this passage from the results document: Manufacturing production increased by 0,6% in February 2019 compared with February 2018. The largest positive contributions were made by the following divisions: Seasonally adjusted manufacturing production decreased by 1,8% in February 2019 compared with January 2019. This followed month-on-month changes of -1,6% in January 2019 and 0,5% in December 2018 . Seasonally adjusted manufacturing production decreased by 0,6% in the three months ended February 2019 compared with the previous three months. Six of the ten manufacturing divisions reported negative growth rates over this period. The largest negative contributions were made by the following divisions: So a whole range of numbers and all showing various different growth and even negative growth rates. So what should one actually be looking at? Well the first one which showed 0.6% growth in February 2019 to February 2018 shows the growth in manufacturing production over the course of a year. While the numbers reported below it shows month on month growth rates (so over a lot shorter term), as well as last three months compared to the prior 3 months. Again these numbers are over a very short period. So for indicators of where manufacturing is heading over a very short period look at the last two reported numbers, while for longer term trends look at the first number that reports year on year growth rates. We prefer the long term growth rates as its a better indicator of underlying trends and there is less chance of short term noise distorting the numbers. While the 0.6% year on year growth rate is a positive number, it is extremely low and a further indication of the sluggish demand in South Africa's economy that has been limping along for years since the end of the financial crises.
food and beverages (3,2% and contributing 0,8 of a percentage point); and
petroleum, chemical products, rubber and plastic products (2,9% and contributing 0,7 of a percentage point)
basic iron and steel, non-ferrous metal products, metal products and machinery (-2,6% and contributing -0,5 of a percentage point); and
wood and wood products, paper, publishing and printing (-3,2% and contributing -0,4 of a percentage point)
15 March 2019: Growth in manufacturing of food and beverages
In this update we take a look at the year on year growth rate (seasonally adjusted) in the volume of goods produced in the food and beverages sector of South Africa, and compare it to the overall growth in volumes of all goods produced in South Africa.
By far the sector showing the highest year on year growth in the food and beverages category is the Diary products group, with its volumes being 9.96% higher than it was in January 2018. Beverages also showed strong growth with its volumes growing by 5.58% compared to January 2018. Meat, fish and fruits disappointed with volumes being down -0.86% in January 2019 when compared to January 2018. As the bar chart above shows total manufacturing volumes of all goods produced in South Africa managed to show a very slim increase in volume of goods produced of 0.1% growth compared to January 2018. This is not a good sign for South Africa's economic growth as manufacturing is one of the main industries in South Africa's GDP (its the fourth biggest industry in SA's economy). So if it has low to no growth it will have an effect on South Africa's GDP numbers too.
6 March 2019: Relative Size of Manufacturing in South Africa's GDP
Based on the latest GDP data released by Statistics South Africa we developed the pie chart below shows the relative contribution of the various industries to South Africa's GDP for the year 2018.
The summary below shows the total worth of each industry as well as its overall contribution to the total economic value of South Africa for 2018. It is ranked from biggest to smallest.
- Finance, real estate and business services: R640 368 228 613 (22.39%)
- General government services: R478 692 538 116 (16.74%)
- Trade, catering and accommodation: R431 668 773 614 (15.10%)
- Manufacturing: R386 883 873 805 (13.53%)
- Transport, storage and communication: R273 192 556 983 (9.55%)
- Mining and quarrying: R230 514 386 567 (8.06%)
- Personal services: R170 530 340 058 (5.96%)
- Construction: R107 665 136 484 (3.77%)
- Agriculture, forestry and fishing: R74 157 433 156 (2.59%)
- Electricity, gas and water: R65 931 792 241 (2.31%)
So the manufacturing industry is the 4th largest industry in South Africa. And while years ago it was around 20% of South Africa's GDP, greater trade with the rest of the world has seen South Africa import more manufactured goods, leading to the industry becoming less important in South Africa in economic terms.
13 February 2019: Manufacturing the 4th largest industry in South Africa
Manufacturing is the country’s fourth largest industry, contributing 14% to the gross domestic product (GDP). The food and beverages division is the most important player in the industry, contributing 25% to total manufacturing activity. The image below, obtained from Statistics South Africa provides a overview of the biggest categories within the South African manufacturing industry.
Food and beverages is the largest component of South Africa's manufacturing industry, closely followed by the Petroleum and chemicals products component, and a distant third place goes to Basic Iron and Steel. These three industries alone makes up almost 70% of the total manufacturing industry of South Africa. Manufaturing is an industry in decline in South Africa, and with loadshedding back in full swing we suspect it will continue its downward decline in South Africa as ESKOM cannot provide enough power for manufacturers to keep producing goods. We predict we will see a spike in manufactured goods being imported in coming months, as businesses hedge their bets against ESKOM and loadshedding and start importing more manufactured goods instead of manufacturing it here.
24 October 2018: Employment per sub sector of manufacturing
In today's update we show the sub sectors of manufacturing in South Africa as well as the number of employees working within each of the sub sectors of South Africa's manufacturing industry (based on the formal sector employment numbers for the manufacturing industry as published by Statistics South Africa's Quarterly Employment Statistics (QES). As the sun burst chart shows, total number of employees in the formal manufacturing sector is 1 1 79 021. Within manufacturing there are various sub sectors, and within these sub sectors there are various sub sectors. The sunburst chart shows the relative size of the sub sectors to total manufacturing employment as well as the relative size of each sub sector within the sub sectors.
The summary below shows the main sub sectors of South Africa's manufacturing industry as well as the number of employees in each of these sub sectors as well as the sub sector's contribution to the total number of employees in the manufacturing industry.
- Basic metals, fabricated metal products , machinery and equipment: 260 917 (22.13%)
- Food, beverages and tobacco: 236 515(20.06%)
- co*ke, refined petroleum products and nuclear fuel: 163 720(13.89%)
- Wood and products of wood: 133 170 (11.29%)
- Transport equipment: 115 888(9.83%)
- Textiles, clothing and leather: 85 019(7.21%)
- Furniture, manufacturing n.e.c.; recyling: 67 531(5.73%)
- Non-metallic mineral products: 56 226(4.77%)
- Electrical machinery and apparatus n.e.c.: 41 716(3.54%)
- Radio, Television and communication equipment: 18 319(1.55%)
24 July 2018: Imports as a percentage of total manufacturing sales
In this update we take a look at the ratio of imports to total manufacturing sales in South Africa. Just what is the percentage of the value of imported goods over the value of goods produced/manufactured locally? And has this ratio changed over time? And if it has, has it gotten better or worse for South Africa's manufacturing industry. Ideally South Africa's manufacturing industry would like the ratio of imported goods over locally produced goods to decline, as this would imply more goods consumed in the South African economy are produced locally instead of imported. The line chart below shows the quarterly value of goods imported into South Africa over the total value of locally produced goods expressed as a percentage.
In quarter 1: 2010, the ratio of imported goods over locally produced goods was sitting at around 54%. So basically imports supply 54% of the goods consumed in South Africa's economy while the manufacturing sector supplied the rest. This shows just how open South Africa's economy is and how dependent South Africa is on others to supply goods to us. This opens the country up to increased price volatility due to the exchange rate, or excessive prices charged on imported goods as foreign suppliers know South Africa cant produce it locally etc. In quarter 1: 2018, the ratio of imported goods over locally produced goods was sitting at 61.9%, up from the 54% in quarter 1 : 2010. So not encouraging for South Africa's manufacturing sector.
13 July 2018: How the structure of SA's manufacturing industry has changed over time
In this update we take a look at how South Africa's manufacturing industry's structure has changed over time. By showing the top 10 categories in terms of manufacturing sales in 1998, 2008 and then in 2018 on pie charts.
1998
The pie chart below shows the top 10 manufacturing categories in South Africa based on the sales values of January 1998. Relative size of each category is shown as percentage of total manufacturing sales. So based on the pie chart below in January 1998, Motor Vehicle manufacturing made up 5.39% of total manufacturing in South Africa. The top 10 manufacturing categories in January 1998 accounted for 47.07% of total manufacturing in January 1998.
The summary below shows all the manufacturing categories and their contribution to total manufacturing as at January 1998:
- Motor vehicles:5.39%
- Other chemical products:5.18%
- Basic iron and steel products:5.00%
- Other food products:4.89%
- Non-ferrous metal products:4.83%
- Beverages:4.61%
- General purpose machinery:4.50%
- Meat , fish, fruit etc.:4.43%
- Special purpose machinery:4.18%
- co*ke, petroleum products and nuclear fuel:4.05%
- Basic chemicals:3.76%
- Paper and paper products:3.70%
- Grain mill products:3.64%
- Other:3.39%
- Other fabricated metal products:3.39%
- Parts and accessories:3.00%
- Non-metallic mineral products:2.80%
- Structural metal products:2.50%
- Wearing apparel:2.48%
- Plastic products:2.34%
- Printing , recorded media:2.15%
- Dairy products:1.83%
- Other textile products:1.62%
- Other transport equipment:1.61%
- Publishing:1.43%
- Textiles:1.33%
- Furniture:1.09%
- Rubber products:1.04%
- Other electrical equipment:1.02%
- Products of wood:0.97%
- Household appliances:0.94%
- Insulated wire and cables:0.85%
- Radio, television and communication apparatus:0.84%
- Knitted, crocheted articles:0.72%
- Professional equipment:0.65%
- Footwear:0.61%
- Sawmilling and planing of wood:0.60%
- Glass and glass products:0.56%
- Bodies for motor vehicles, trailers and semi-trailers:0.52%
- Leather and leather products:0.46%
- Electric motors, generators, transformers:0.41%
- Electricity distribution and control apparatus:0.38%
- Accumulators, primary cells and primary batteries:0.18%
- Electric lamps and lighting equipment:0.15%
2008
The pie chart below shows the top 10 manufacturing categories in South Africa based on the sales values of January 1998. Relative size of each category is shown as percentage of total manufacturing sales. So based on the pie chart below in January 2008, the manufacturing of basic iron and steel products made up 9.08% of total manufacturing in South Africa. The top 10 manufacturing categories in January 2008 accounted for 54.32% of total manufacturing in January 2008.
The summary below shows all the manufacturing categories and their contribution to total manufacturing as at January 2008:
- Basic iron and steel products:9.08%
- co*ke, petroleum products and nuclear fuel:7.07%
- Motor vehicles:7.04%
- Parts and accessories:5.22%
- Basic chemicals:4.58%
- Meat , fish, fruit etc.:4.50%
- Beverages:4.40%
- Other chemical products:4.33%
- Other:4.05%
- Non-ferrous metal products:4.04%
- Other food products:3.72%
- Grain mill products:3.27%
- Other fabricated metal products:3.26%
- Paper and paper products:3.17%
- Special purpose machinery:3.13%
- Non-metallic mineral products:2.90%
- General purpose machinery:2.86%
- Plastic products:2.61%
- Structural metal products:2.33%
- Dairy products:1.53%
- Other transport equipment:1.45%
- Wearing apparel:1.38%
- Printing , recorded media:1.30%
- Products of wood:1.24%
- Publishing:1.17%
- Other textile products:1.14%
- Other electrical equipment:0.90%
- Insulated wire and cables:0.79%
- Household appliances:0.73%
- Radio, television and communication apparatus:0.73%
- Furniture:0.72%
- Rubber products:0.72%
- Bodies for motor vehicles, trailers and semi-trailers:0.70%
- Electricity distribution and control apparatus:0.54%
- Professional equipment:0.52%
- Sawmilling and planing of wood:0.49%
- Textiles:0.48%
- Glass and glass products:0.48%
- Electric motors, generators, transformers:0.36%
- Leather and leather products:0.32%
- Footwear:0.25%
- Knitted, crocheted articles:0.22%
- Accumulators, primary cells and primary batteries:0.16%
- Electric lamps and lighting equipment:0.12%
2018
The pie chart below shows the top 10 manufacturing categories in South Africa based on the sales values of January 2018. Relative size of each category is shown as percentage of total manufacturing sales. So based on the pie chart below in January 2018, the manufacturing of meat,fish, fruit etc made up 7.20% of total manufacturing in South Africa. The top 10 manufacturing categories in January 2018 accounted for 58.68% of total manufacturing in January 2018.
The summary below shows all the manufacturing categories and their contribution to total manufacturing as at January 2018:
- Meat , fish, fruit etc.:7.20%
- co*ke, petroleum products and nuclear fuel:7.02%
- Motor vehicles:6.74%
- Basic iron and steel products:6.45%
- Beverages:6.41%
- Other chemical products:6.08%
- Other food products:5.39%
- Non-ferrous metal products:5.29%
- Basic chemicals:4.32%
- Parts and accessories:3.79%
- Other fabricated metal products:3.71%
- Paper and paper products:3.61%
- Grain mill products:3.11%
- Other:3.11%
- Plastic products:2.96%
- Special purpose machinery:2.48%
- Non-metallic mineral products:2.41%
- Dairy products:2.04%
- General purpose machinery:1.71%
- Other transport equipment:1.47%
- Structural metal products:1.38%
- Printing , recorded media:1.32%
- Products of wood:0.92%
- Wearing apparel:0.86%
- Publishing:0.79%
- Rubber products:0.77%
- Other electrical equipment:0.77%
- Furniture:0.74%
- Radio, television and communication apparatus:0.74%
- Household appliances:0.65%
- Other textile products:0.65%
- Bodies for motor vehicles, trailers and semi-trailers:0.64%
- Glass and glass products:0.57%
- Electric motors, generators, transformers:0.57%
- Sawmilling and planing of wood:0.56%
- Professional equipment:0.46%
- Insulated wire and cables:0.45%
- Electricity distribution and control apparatus:0.43%
- Textiles:0.36%
- Leather and leather products:0.33%
- Footwear:0.28%
- Accumulators, primary cells and primary batteries:0.18%
- Electric lamps and lighting equipment:0.15%
Interestingly the contribution of the top 10 industries to total manufacturing are getting bigger over time, with it having accounted for less than half of manufacturing in January 1998, it nudged to close to 55% in 2008 and is currently sitting at close to 60% of total manufacturing. Question is whether this is an indication that South Africa's manufacturing industry is becoming more concentrated around a few categories and dropping the manufacturing of smaller items and rather have them imported?
11 June 2018: Manufacturing going nowhere slowly
In today's update we take a look at the growth in volume and value of goods produced over the years. And find that South Africa's manufacturing sector is still stuck in a rut, with growth near zero and not gaining any traction. This is a worry for South Africans as local production is stagnating and not growing, so if local consumption has increased it means more are being imported, which exposes South Africans to exchange rate movements and increases the country's dependence on others.
As the line chart above shows the growth in the volume of goods produced has been pretty flat and hovering around the no growth make for a number of years. Even the value of goods produced has not grown substantially over the last 20 years. In the last couple of years the year on year growth in the value of goods produced has declined. Pointing to manufacturers struggling to pass on goods produced at higher prices/margins, and combined with the low volume growth it points to a sector in the South African economy that is going nowhere slowly. The latest GDP figures showed quarter on quarter that manufacturing declined by -6.4% See more on the latest GDP figures here: South Africa's GDP
18 March 2018: Index of volume of goods produced per year
In this latest update on South Africa's manufacturing page we take a look at the index of volumes produced by the South African manufacturing industry. Data published by Statistics South Africa shows that volumes of goods produced by the South African manufacturing industry has increased by just 7.2% from 2010 to 2017. That is growth of less than 1.5% per year in the total volume of goods produced by manufacturers in South Africa. The line chart below shows the Index of volume of goods produced over time, where the total volume of goods in 2010 is set equal to 100.
The line graph above shows significant growth in the volume of goods produced in South Africa during the periods of 2000 to 2010, after which growth has slowed down significantly. And there are a few reasons for this. ESKOM with their rolling blackouts and struggling to provide sufficient power to the grid affected output of goods produced and of course demand slumped during the financial crises which obviously affects supply as no producer wants to keep supplying goods when the demand for the good is not there.
The summary below shows the year on year growth in the volume of goods produced by the manufacturing industry. The strong growth from 2000 to 2010 can clearly be seen (with a few negative years in between)
- 1994: 2.7%
- 1995: 6.5%
- 1996: -6.6%
- 1997: 2.7%
- 1998: -0.2%
- 1999: 0.6%
- 2000: 8.1%
- 2001: 3.2%
- 2002: 2.8%
- 2003: -1.5%
- 2004: 4.9%
- 2005: 6.2%
- 2006: 6.4%
- 2007: 5.4%
- 2008: 2.3%
- 2009: -10.6%
- 2010: 5.9%
- 2011: 3.0%
- 2012: 2.1%
- 2013: 1.0%
- 2014: 0.3%
- 2015: -0.4%
- 2016: 0.9%
The concern for the manufacturing industry is the fact that its overall contribution to South Africa's economy is (and has been) declining over the last number of years, while South Africa's population is still increasing. So either South Africans are consuming/ using less manufactured goods or local manufactured goods are being substituted or replaced by cheaper imported goods.
15 March 2018: Relative contribution of the various provinces to SA's total manufacturing
The pie chart below shows the relative contribution of each of South Africa's provinces to South Africa's total manufacturing in 1995. And a graphic will follow with the latest numbers as at 2016.
Its no real surprise that Gauteng was the biggest contributor to South Africa's manufacturing industry in 1995 already, with it contributing around 40% of total manufacturing in South Africa as it was and still remains the economic hub of South Africa. KwaZulu-Natal came in a distant 2nd place with it contributing roughly 20% or half of what Gauteng contributes to South Africa's manufacturing industry. The Western Cape comes in at 3rd place with a contribution of around 16.5% of South Africa's total manufacturing as at 1995. A summary of all the provinces contribution to South Africa's manufacturing industry in 1995 is shown below:
- Gauteng: 40.8%
- KwaZulu-Natal: 20.6%
- Western Cape: 16.5%
- Eastern Cape: 7.7%
- Mpumalanga: 6.0%
- Free State: 3.7%
- North West: 2.6%
- Limpopo: 1.5%
- Northern Cape: 0.6%
The pie chart below shows the relative contribution of the various provinces to South Africa's total manufacturing for 2016
As the 2016 pie chart above shows the top three biggest contribution provinces to South Africa's manufacturing industry has not changed from 1995 to 2016. A summary of all the provincescontribution to South Africa's manufacturing industry in 2016 is shown below:
- Gauteng: 40.3%
- KwaZulu-Natal: 21.1%
- Western Cape: 15.3%
- Eastern Cape: 7.5%
- Mpumalanga: 7.1%
- Free State: 4.0%
- North West: 2.6%
- Limpopo: 1.5%
- Northern Cape: 0.5%
However the size of the contribution of each province has changed over time. So which provinces' relative contribution to South Africa's manufacturing industry has increased over time, and which provinces' relative contribution to manufacturing has declined from 1995 to 2016? A summary of the changes in relative contribution per province to South Africa's manufacturing industry from 19095 to 2016 is shown below:
- Mpumalanga 17.8%
- Free State 10.0%
- KwaZulu-Natal 2.4%
- North West -0.1%
- Gauteng -1.3%
- Eastern Cape -1.7%
- Limpopo -4.3%
- Northern Cape -5.4%
- Western Cape -7.3%
The biggest decline in its relative contribution to South Africa's manufacturing industry was the Western Cape with its contribution declining from 16.5% in 1995 to 15.3% in 2016 (or a decline of 7.3%)
Mpumalanga showed the strongest increase in its relative contribution to South Africa's manufacturing industry with its contribution increasing from 6% in 1995 to 7.1% in 2016 (which is an increase of 17.8%) in its relative contribution to South Africa's manufacturing. Other increases in the relative contribution included Free State whose contribution went up from 3.7% to 4% (or a 10% increase), and Kwazulu-Natal showed an increase from 20.6% in 1995 to 21.1% in 2016 (or an increase of 2.4%).
14 March 2018: Relative size of manufacturing industry in South Africa's economy
The graphic below shows the relative size of manufacturing in South Africa's economy. And as can be seen from the graphic it is not a good story being told for the industry in South Africa.
South Africa's manufacturing industry's contribution to South Africa's overall economy has been declining steadily over the last two decades. While there are a few reasons for the decline, we predict the slide to continue, not only in terms of the relative importance of the industry in South Africa's economy but also with the number of people employed in this particular industry over time. So why has manufacturing been declining in importance in South Africa's economy over recent years?
- Lack of foreign direct investment and local company investments in South Africa . Companies not investing in new plants and factories in South Africa. And there are various reasons for this, which include but are not limited to:
- Restrictive laws and union sway makes SA a difficult employing market.
- Power supply constraints in recent years as well as the cost of electricity in South Africa
- Political instability, including the latest issues regarding expropriation of land without compensation
- Increased open economy for South Africa in last two decades (I.e South Africa trading more and more with the rest of the world, and therefore importing more final manufactured goods).
- Lack of skills and know how (partly due to the "brain drain " where skilled people have left South Africa for greener pastures) and lack of investment in developing skills and know how.
As for employment in the industry. We do not see the picture improving. With the advent of the machine age and machine learning, automated machinery are being used more and more, replacing humans. Part of the appeal is the fact that machines can work 24/7, do not take sick leave or annualleave and do not have the labour related issues humans do, machines do not make errors associated with humans due to fatigueor negligence. The section below will take a look at the various sectors within the manufacturing industry and their contribution to South Africa's total manufacturing industry.
Sectors within the manufacturing industry
Additional Content:
Related Topics
- SA's trade data page
- SA's GDP animation
- SA's economic structure
- South Africa's GDP
