Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 2011 By Dr Iraj Abedian...
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Transcript of Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 2011 By Dr Iraj Abedian...
Manufacturing Bulletin Q3-2011
Presentation : Media Briefing
8 December 2011
By
Dr Iraj AbedianPan-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: Q3-2011
5. Concluding Remarks
Slide # 3
Introduction: Q3-2011 Manufacturing Circle Survey
SectorsPharmaceutical
Electrical machinery
Food & beverages
Vehicles & parts
Wood & wood products
Basic iron & steel & other
Glass, non-metallic products
Construction Materials
Textiles, clothing, footwear
Electrical and Electronics
Paper and Packaging
Profile of Survey Participants
Rebound in Q3-2011 Manufacturing Output
Source: Statistics South Africa, Q3 2011 GDP
Manufacturing activity rebounded to -1.9% q/q in Q3 2011, up from -8.8% in Q2 2011. This was driven by the tentative global economic environment and the disruptions in production caused by the prolonged strike action in Q3 2011. However, the sharp depreciation in the rand since August prevented a steep decline continuing into Q3.
Manufacturing Output
Manufacturing Employment in Q3-2011
Source: Statistics South Africa, Q3 2011 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
DATE PMI (sa) PMI (nsa)Business
ActivityNew Sales
Backlog of
order salesInventories
Purchasing
commitments
Suppliers'
performancePrices Employment
Expected
business
conditions
Nov-10 52.9 59.1 54.8 56.5 42.2 51.4 57.2 50.6 61.8 47.6 64.6Dec-10 51.7 55.1 54.5 53.2 43.8 56.2 53.1 49.8 63.1 45.0 62.5Jan-11 54.6 47.8 51.0 59.6 35.0 58.9 44.4 56.5 71.3 47.8 67.1Feb-11 54.8 52.0 51.6 59.0 41.4 54.7 50.0 56.1 81.7 51.6 61.3Mar-11 57.2 54.8 59.7 62.0 45.3 59.0 52.0 55.6 88.0 46.9 58.1Apr-11 56.4 51.8 58.4 61.1 39.2 61.5 53.8 50.4 82.9 49.0 58.1May-11 55.1 53.2 56.8 61.0 43.8 54.5 56.8 49.6 80.0 48.7 66.7June-11 53.9 50.8 55.2 58.0 40.3 58.8 52.6 49.0 76.0 47.7 64.3July-11 44.2 42.3 35.9 48.8 43.2 48.8 45.8 52.6 75.0 39.1 59.5Aug-11 46.7 47.3 46.6 44.6 38.1 52.2 45.0 52.2 75.2 43.1 53.7Sep-11 50.2 55.6 51.3 50.3 45.7 53.1 54.3 54.5 73.9 43.9 60.8Oct-11 50.5 57.0 50.9 51.6 49.0 51.1 55.4 53.6 82.9 45.6 62.4Nov-11 51.6 58.2 52.3 51.2 46.0 54.4 53.1 56.5 82.1 46.5 55.0
sa - seasonally adjusted
nsa - not seasonally adjusted
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.
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 Q3 2011. The share of respondents who increased their employment levels by between 1 and over 5% rose from 30% in Q2 2011 to 40% in Q3 2011. The skills set in the industry remains mediocre.
Labour Productivity and Regulatory Environment
On the balance labour productivity levels remained unchanged during Q3 2011. 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 Q3 2011 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 Q4- 2011.
However, the unfavourable global economic environment and moderating domestic demand will keep the growth in the sector contained.