Manufacturing: 'Utilisation of production capacity on a decline' – Stats SA

Pixabay

On Thursday, Statistics South Africa (Stats SA) published its findings on Manufacturing: Utilisation of production capacity by large enterprises for November 2019.

Diving into the numbers: A look at the decline in utilisation of production capacity

Compared to performance outcomes for November 2018, November 2019 saw a notable decline of 2%.

Stats SA further revealed that eight of the 10 manufacturing sectors in South Africa showed a decrease in “utilisation of production capacity in November 2019 compared with November 2018.”

These were the largest decreases recorded by the sectors:

petroleum, chemical products, rubber and plastic products (-4.1%);glass and non-metallic mineral products (-3.9%);motor vehicles, parts and accessories and other transport equipment (-3.7%);furniture and ‘other’ manufacturing (-3.2%);basic iron and steel, non-ferrous metal products, metal products and machinery (-2.6%); andradio, television and communication apparatus and professional equipment (-2.5%).Stats SA: Year-on-year data shows further decline

Stats SA also found that compared with 2018, 2019’s utilisation of production capacity by large enterprises also recorded losses in the following sectors:

glass and non-metallic mineral products (-3,5 percentage points);radio, television and communication apparatus and professional equipment (-1,6 percentage points);textiles, clothing, leather and footwear (-1,4 percentage points);basic iron and steel, non-ferrous metal products, metal products and machinery (-1,0 percentage point);motor vehicles, parts and accessories and other transport equipment (-1,0 percentage point); andfurniture and ‘other’ manufacturing (-0,9 of a percentage point).What does all of this mean?

To make better sense of the above, Stats SA explained that the survey report is to “assess the degree of capacity constraint experienced in the manufacturing industry.”

“The results of the quarterly manufacturing utilisation of production capacity survey are used to assess the degree of capacity constraint experienced in the manufacturing industry. The information in this release is a key component in the Composite Coincident Business Cycle Indicator and is used to analyse movements in gross fixed capital formation in the national accounts,” Stats SA noted.

Essentially, this gives us a greater understanding of South African manufacturing’s utilisation of production capacity, the total under-utilisation and reasons for this in each sector.