Manufacturing Bulletin Q Presentation : Media Briefing 8 December 2011 By Dr Iraj Abedian Pan-African Investment & Research Services(Pty) Ltd.
Slide # 2 Outline 1. Introduction 2. Overall Manufacturing Business Confidence 3. Current South African Manufacturing Trends 4. Manufacturing Survey Results: Q Concluding Remarks
Slide # 3 Introduction: Q Manufacturing Circle Survey Profile of Survey Participants
Overall Manufacturing Business Confidence
Current South African Manufacturing Trends
Rebound in Q Manufacturing Output Source: Statistics South Africa, Q GDP Manufacturing activity rebounded to -1.9% q/q in Q3 2011, up from -8.8% in Q This was driven by the tentative global economic environment and the disruptions in production caused by the prolonged strike action in Q However, the sharp depreciation in the rand since August prevented a steep decline continuing into Q3. Manufacturing Output
Manufacturing Employment in Q Source: Statistics South Africa, Q Quarterly Labour Force Survey Employment levels rose marginally in Q3 2011, as the sector created an additional 2000 jobs. Employment Trends in the Manufacturing Sector
Manufacturing Outlook Remains Hesitant Source: Bureau for Economic Research Activity in the manufacturing sector is expected to remain sluggish on the back of a depressed global economic environment and moderating domestic demand. Kagiso Purchasing Manager’s Index
Manufacturing Survey: Q3-2011
Demand Conditions: Export-Orientation Profile The ratio of domestic sales to total sales still outweighed that of exports, with 83% (previously 88%) of manufacturers shifting 60% or more of their allocations to the domestic market.
Demand Conditions: Domestic vs. Exports Sales
Supply Conditions: Input Costs and Ratio of Components There was a significant acceleration in production costs as 94% of survey respondents recorded growth of up to 15% in total input costs. The key driver was a rapid increase in imported input costs (94% of manufacturing CEOs saw their imported input costs rise further in Q3). This significant rise is in tandem with the rapid acceleration in producer prices.
Employment Conditions Employment levels amongst the manufacturers surveyed improved in in Q The share of respondents who increased their employment levels by between 1 and over 5% rose from 30% in Q to 40% in Q The skills set in the industry remains mediocre.
Labour Productivity and Regulatory Environment On the balance labour productivity levels remained unchanged during Q Even though the regulatory environment remained largely the same, there was a slight pick-up in survey respondents who were optimistic about the regulatory environment.
Financial Conditions There was a slight widening in profit margins during Q in tandem with the increase in manufacturing sales. The share of respondents who recorded a profit change of 15% and more doubled from the preceding quarter, to 16%. There was a small increase in the number of respondents registering a debt to equity ratio of 65% or more.
Financial Conditions There was a 10% increase in the share of respondents accessing finance at between JIBAR plus 3% and JIBAR plus 6%.
Concluding Remarks: The manufacturing sector continues to face serious bottlenecks; Based on the survey results, the domestic manufacturing sector should see further improvement during Q However, the unfavourable global economic environment and moderating domestic demand will keep the growth in the sector contained.
Slide # 18 Thank you for your attention