Manufacturing sector sees decline in capacity utilisation

THE manufacturing sector experienced a 1,3 percent decline in capacity utilisation during the third quarter of 2024, the latest Business Tendency Survey Report by the Zimbabwe National Statistics Agency (ZimStat) has revealed.

ZimStat attributed the decline to persistent challenges such as cash flow difficulties, electricity shortages, and uncertainty in the economic environment.

“Combined third quarter 2024 capacity utilisation for the manufacturing sector was 47,1 percent, down from 48,4 percent in the second quarter,” said ZimStat.

For large companies, capacity utilisation dropped to 57,5 percent from 60,8 percent in the second quarter while small and medium enterprises (SMEs) recorded a utilisation rate of 45,4 percent.

ZimStat noted that 41 percent of respondents in the manufacturing sector reported unchanged production levels during the third quarter, while 18 percent observed an increase.

In the mining sector, capacity utilisation fell to 52,7 percent from 57,5 percent in the second quarter. Despite this decline, 34 percent of respondents anticipate an increase in production levels during the fourth quarter of 2024.

Despite the challenges, the manufacturing sector has shown resilience in recent years. The sector has rebounded from a low of 10 percent capacity utilisation in 2008, thanks to increased Government support and investments.

This recovery is reflected in the growing presence of locally produced goods, which now occupy about 80 percent of shelf space in supermarkets.

ZimStat reported a year-on-year increase in the Volume of Manufacturing Index (VMI) for the third quarter of 2024, which stood at 156,21, up 14,57 percent from 136,34 recorded during the same period in 2023.

VMI is an economic indicator that shows relative change in the volume of output in the manufacturing sector over time, in relation to a given reference period.

Capacity utilisation remains a critical indicator of industrial performance, reflecting the efficiency and output levels of companies and the broader economy.

While the decline in some sectors is concerning, the overall growth in the VMI highlights ongoing recovery and potential for future expansion.

During the period under review, ZimStat said the output index for foodstuffs was 140,1, drinks, beverages and tobacco recorded a 202,85 output index and textile and ginning recorded an index of 73,38, a 22, 4 percent decrease from 94,58 recorded the same period last year. —chronicle

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