South Africa‘s fashion sector, suffering from a lack of demand and a shortage of raw materials, posted a utilization rate of 72.3 percent in the third quarter, the lowest of any sector, according to a new report from Stats South Africa.
The sector, which consists of textile, clothing, leather and footwear factories, saw its factory utilization rate fall from 72.4 percent in 2017 and 71.6 percent a year ago. The average large South African factory used 81 percent of its capacity in the third quarter, a slight uptick from an 80.6 percent utilization rate in the second quarter.
Stats South Africa said the main reason for factories not running at full output was lack of demand due to the country’s struggling economy. The South African economy officially slipped into recession during the second quarter, shrinking by 0.7 percent quarter over quarter. This followed a revised 2.6 percent contraction in the first quarter.
The downturn was a result of a fall-off in activity in the agriculture, transport, trade, government and manufacturing industries, Stats South Africa said in a separate report. The trade industry experienced its second consecutive quarter of negative growth, falling 1.9 percent, as subdued sales in motor vehicles and retail trade contributed to the decline. South African household consumption expenditure fell in the second quarter compared with the first quarter, with spending declines on products such as transport, food, beverages and clothing.
Of the 10 industries Stats South Africa included in its quarterly manufacturing utilization report, seven showed annual declines in utilization. Electronics factories suffered most, with a drop of 4.5 percentage points, to 80.5 percent, followed by food and beverage factories, which fell 1.9 percentage points, to 80.8 percent utilization. Petroleum and plastic plants posted the highest rate at 83.8 percent.
The results of the quarterly manufacturing utilization of production capacity survey are a key component in the Composite Coincident Business Cycle Indicator and used to analyze movements in key economic sectors of the country’s economy.