The Steel and Engineering Industries Federation of Southern Africa (Seifsa) says it is “extremely concerned” about persistently lower confidence and production levels, which could lead to possible further job losses in the metals and engineering sector as indicated by analysis of recent data.
“The metals and engineering sector is probably on a cliff and not at the bottom of a trough. The first half 2016 data has disappointed,” Seifsa chief economist Henk Langenhoven said on Thursday.
He explained that, after a slight improvement in resource utilisation during the first quarter, the sector fell back into lethargy by nearly 0.8% in the second quarter, with utilisation recorded at 77% against the full capacity benchmark of 85%.
He added that capacity utilisation during the first half of the year was 1% lower than in the first half of 2015.
Seifsa expects a 3% year-on-year contraction in production for 2016: the 5% year-on-year and 6% year-to-date actual declines are, therefore, worse than the federation had anticipated and were of extreme concern.
“The metals and engineering sector is in a critical condition and it seems more certain that the patient will suffer more setbacks over the next six months before improvements can be expected,” Langenhoven stated.
