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SA manufacturing in crisis, Parliament must intervene - DA

Fin24 logo Fin24 2017-07-12 Fin24

SA manufacturing in crisis, Parliament must intervene - DA © Fin24 SA manufacturing in crisis, Parliament must intervene - DA Cape Town - South Africa's manufacturing sector is in a crisis, Democratic Alliance shadow minister of trade and industry Dean Macpherson said in reaction to the latest data released by Statistics SA.

His view is that Parliament should step in and take control by holding hearings "to get to the bottom of what is really going on in the sector", and how it can be turned around.

Stats SA revealed that manufacturing was down 0.8% year-on-year (y/y) between May 2016 and May 2017 and down 0.3% from April 2017 to May 2017. This is a continuation of a decline in manufacturing from last month’s y/y figures of 4.9% between April 2016 and April 2017.

"By these figures, we now know manufacturing is in a recession with no clear way out from the government," said Macpherson.

He has written to Joan Fubbs, chair of the portfolio committee on trade and industry, to request that hearings relating to the manufacturing crisis are prioritised above all other business.

READ: Manufacturing production drops in May

In Macpherson's view, Minister of Trade and Industry Rob Davies needs to take a more active stance in addressing the crisis.

"What South Africa really needs in this volatile atmosphere is a government committed to strengthening the manufacturing sector as it will create the jobs required for economic growth," said Macpherson.

Fin24 reported on Tuesday that Stanlib chief economist Kevin Lings pointed out that manufacturing activity in the country is still below levels reported before the global financial crisis in 2008.

The sector has had an annual growth of -0.3% over the past 12 months, and is still in recession.

The contraction is mainly attributable to the 3.4% decline in vehicle output and a 3.6% contraction in chemical production. There was also a 1.5% contraction in food and beverage production. Clothing production was up 3.2% for the month, and iron and steel production also rose 2.8%.

Manufacturing production is expected to decline 1% in 2017. During 2015, the manufacturing sector reported growth of -0.04%, the worst annual performance since the 2009 recession when the sector saw a 13.5% decline, said Lings. It grew by 0.8% only in 2016.

Manufacturing has been performing poorly, despite policy initiatives to boost the sector as well as a weaker exchange rate. An improvement in agriculture and mining activity could be beneficial and prevent further decline, said Lings.

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