Rise in construction and building material sales bodes well for M&E sector
The uptick in sales of construction and building materials, amid increased construction activity, is encouraging and bodes well for the Metals and Engineering (M&E) sector, attests the Steel and Engineering Industries Federation of Southern Africa (SEIFSA).
Wholesale trade sales data released by Statistics South Africa (StatsSA) recently showed an increase in sales of 10.6% in March 2021, compared with March 2020, while month-on-month wholesale trade sales decreased by 1.6% in March 2021, when compared with February. In the construction and building materials category, sales increased from R10.8-billion in February 2021 to R12.3-billion in March 2021, with year-on-year growth of 38.6% in March 2021.
The increase in the sale of construction and building material was driven mainly by the increase in demand of building supplies such in basic steel products, cement and bricks, as construction activity ramps up amid relaxed Covid-19 regulations. The increase in M&E production sales, which improved significantly from R70-billion in February 20201 to R79-billion in March 2021 also supports the trend.
Commenting on the data, SEIFSA Chief Economist Chifipa Mhango said the increase in construction and building material is positive news for the M&E sector as it indicates increased activity, which will continue to drive demand for the sector’s products. He noted that the Government’s increased focus on localisation will help sustain this improvement.
“As we try to rebuild our economy by being more inward-looking to drive the local manufacturing capacity of, among other things, construction and building material, the government needs to ensure that State entities comply with local content procurement requirements to drive demand, protect and create jobs,” Mhango said.View more