South African manufacturing sector has taken a knock from the failure by the country’s power utility Eskom to provide reliable electricity, Statistics South Africa (Stats SA) said on Friday, 10 January 2020.
According to the state agency, the manufacturing decline has been attributed to Eskom’s load shedding (power rationing) which has negatively impacted production in the sector.
Stats SA said data showed that manufacturing production had been on a free-fall for six consecutive months until November 2019.
Production output slumped to 3.6 percent in November, following a 0.8 percent year-on-year fall in October, the agency stated.
The main decreases were recorded in production of wood and wood products, paper, publishing and printing, followed by textiles. However, both food and beverages recorded positive growth, it noted.
“Textile and clothing experienced its 12 consecutive month of decline, falling by 13.3 percent. Six other divisions experienced slower growth, most noticeable being furniture and other manufacturing divisions which recorded a 9.2 percent drop,” senior Stats SA official Juan-Pierre Terblanche said.
The food and beverages sector expanded by 1.3 percent in November.
“We really need to get into grips with the Eskom problem very urgently to see any economic growth in South Africa going forward,” said Jannie Rossouw, interim Head of Wits University’s Business School in Johannesburg.
There are growing fears that the ailing economy could fall into recession as some of the key sectors of the economy have been under-performing in the fourth quarter of last year, Rossouw stated.
He added that the unpredictability of power supply would continue to compromise the manufacturing sector by reducing production output from local firms.