The manufacturing industry rebounded in 2018, recording its highest annual growth rate in five years. The food and beverages and automotive divisions were the major drivers behind the rise. However, manufacturers in communication equipment, electrical machinery and clothing failed to perform.
Manufacturing production increased by 1,2% in 2018 compared with 2017, according to Stats SA’s latest Manufacturing: Production and sales release1. This follows a 0,5% contraction in 2017 which had come after a rise of 0,7% in 2016 (click on the chart to enlarge). Manufacturing’s rebound in 2018 helped lift the country out of recession in the third quarter of the year2.
Manufacturing is the country’s fourth largest industry, contributing 14% to the gross domestic product (GDP)3. The food and beverages division is the most important player in the industry, contributing 25% to total manufacturing activity.
According to the chart below, five of the ten manufacturing divisions increased production in 2018. The motor vehicles, parts and accessories division was the top performer, growing by 4,9%.
Within this division, factories involved in the production of vehicle accessories had the most to celebrate, enjoying a 9,2% rise in activity. Motor vehicle manufacturing was the other notable mover. After two consecutive years of decline, motor vehicle production bounced back in 2018 with a 3,5% growth rate. This is good news for automotive manufacturers based primarily in the provinces of Eastern Cape and Gauteng.
The food and beverages division was the second top performer in 2018 (up by 4,6%), contributing the most to overall manufacturing growth. All the food groups had a good year, in particular ‘other’ food (including sugar) (up by 5,4%), dairy (up by 5,0%), and meat, fish and fruit (up by 4,2%).
South African factories that performed poorly in 2018 include those involved in the production of communication equipment, electrical machinery, textiles and clothing, wood and paper, and petroleum and chemical products.
Textiles and clothing experienced its fourth consecutive year of production decline, contracting by 2,4% in 2018. Manufacturers in wearing apparel products had a particularly disappointing 2018, recording a 4,9% drop in production. Leather products and textiles didn’t do too well either, falling by 3,9% and 3,3% respectively.
The clothing sub-divisions that saw positive growth in 2018 were footwear (up by 3,5%) and the miscellaneous group ‘other textile products’ (up by 1,3%). Manufacturers in automotive textiles (material for seats and upholstery) had a good year, contributing to the rise in the ‘other textile products’ sub-division.
Not only does manufacturing play an important role in the national economy, but it’s also an important source of employment, providing work for one in every ten individuals in South Africa’s workforce. If manufacturing gains momentum, it will bode well for its workforce of 1,7 million people4, as well as for the country as a whole.
1 Stats SA, Manufacturing: Production and sales, December 2018, Table 2 (view here).
2 Stats SA, The recession ends as GDP climbs by 2,2% (read here).
3 Stats SA, Gross domestic product (GDP), 3rd quarter 2018, Media presentation (view here).
4 Stats SA, Quarterly Labour Force Survey, Quarter 3: 2018, Table B (view here).