Factory output falls by the most on record

SA manufacturing output in April crashed 49.4%.
SA manufacturing output in April crashed 49.4%.

Level 5 lockdown restrictions in April, which limited South Africa's economic activity to essential services, saw annual manufacturing output fall by 49.4%.

This dwarfs the 5.4% decline recorded for March 2020.

"The Covid-19 pandemic and lockdown regulations since 27 March 2020 have had an extensive impact on economic activity," Stats SA said in a report on the latest figures.

The figures have hardly surprised, with analysts expecting the lockdown to weigh heavily on the sector. NKC Research had projected that manufacturing would plummet by 46.1%, given the "severe strain" it experienced.

Manufacturing production has been on a declining trend for 11 consecutive months, FNB economists said in a note last week. The economists anticipated that April's reading would be the largest on record, this given that the Absa Purchasing Manager's Index already signaled a record decline in business activity for the sector. 

SA manufactuing production crashed by 49.4% in Apr
Analysts from FNB anticipated April would record the largest drop in manufacturing output on record. (Graph: Stats SA, 2020).

South Africa has already seen a rise in job losses over the course of the lockdown that began in the middle of March. There are some projections of a million job losses by the end of the year. 

With the rate of Covid-19 cases rising and deaths increasing, there is also growing speculation of a possible return to stricter lockdown regulations. Should a harder lockdown to reinstituted to stem the pandemic's growth, Investec says the economy may only recover to 2019 levels in 2025 with unemployment skyrocketing to 40% in the second quarter from 30.1% in the first.

Data from Stats SA showed declines across the board. Basic iron and steel industry production fell by 65.4%, the production of petroleum, chemical products and rubber and plastic products shrank by 41.5%, and motor vehicle production dropped by 98%. The production of wood, wood products and paper declined by 49.2%. In comparison, the decline in food and beverage production was tamer, at 19.4%.

Month-on-month, production declined by 44.3% from March. Over the three months ending April, output declined by 16.9%.

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