19 August 2021
By: Nuraan Alli
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While the year-on-year uptick in demand for construction and building materials is from a low base, it is a welcome development for the Metals & Engineering Sector (M&E) as it indicates a steady increase in economic activity as the country adjusts to living in a pandemic,” the Steel and Engineering Industries Federation of Southern Africa (SEIFSA), said today.
Wholesale trade sales data released by Statistics South Africa (StatsSA) today showed an increase in sales of 10.3% in June 2021 compared to June 2020, to reach R155.7-billion in constant terms, with a month-on-month decline of 5.1% in June 2021, when compared with May 2021, and a 13.8% increase year to date. The main contributors to the increase were construction and building materials, solid, liquid and gaseous fuels and related products and other intermediate products, waste and scrap.
Sales of construction and building materials declined slightly in June 2021, to R11.6-billion from R13.2-billion in May 2021, with year-on-year growth of 29.6% in June 2021. This is mainly attributable to discouragingly rising costs that reduced activity in the residential segment.
According to SEIFSA Chief Economist Chifipa Mhango, the improvement from last year is mainly due to increased building and construction activity this year. He said the increasecoincides with a rise in M&E production sales to R81-billion in June 2021 from R78.9-billion in May 2021. In the first six months of 2021 to June, total building and construction activity reached R69.9-billion, thus representing a growth of 69.2% when compared to the first six months of 2020.
Mr Mhango said increased activity in building and construction bodes well for the M&E industry. “The resulting increase in demand for M&E products is welcome, though we do urge the Government to partner with us to find ways to sustain the recovery of the industry, which has been struggling due to, among others, rising electricity and transport costs,” he said.
Mr Mhango added that the recent civil unrest and looting in KwaZulu-Natal and Gauteng will have caused a dent in sales figures for the month of July. “We are yet to assess the complete picture; however, it is crucial that the Government continues to put measures in place to avoid further disruptions that could negatively hamper the supply patterns as well as production.