No halt to job losses in manufacturing

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The survey, by the Manufacturing Circle showed that confidence levels among local producers dwindled in the third quarter.

A weaker rand has been supporting exporters, but other factors such as higher electricity and labour costs are offsetting these gains.

It also showed that strikes, sluggish consumer demand and disruptions in mining dented manufacturing confidence in the third quarter.

"The fragile, even weak sentiment means there are no immediate prospects for expansion in manufacturing‚" Iraj Abedian‚ chief executive of Pan African Investment and Research Services, said.

Fewer than 50% expect stable business conditions

Pan African Investment and Research Services conducted the survey on behalf of the Manufacturing Circle, an organisation representing SA's manufacturers, including most of the bigger ones.

The survey found that despite some expected improvements in the next 12 months, less than half of the companies that participated expected a stable business environment in the coming months.

Producers believe unstable labour relations, regulatory challenges and a failure to compete against imports could continue to play a role in the sector.

Input costs, including those related to labour, continued to weigh on manufacturers and led to them either keeping employment levels unchanged or shedding jobs in the third quarter.

More job losses expected

Although some still plan to keep employment levels unchanged over the next 12 months, 37% planned to shed jobs while only 27% hoped to create employment according to the survey.

With local demand still under pressure, local exporters are looking elsewhere for buyers. This was evident in the growth in exports to the rest of Africa. The survey showed that compared with other regions, Africa was the most important export destination for locally produced goods in the third quarter.

Manufacturing Circle chairman Mike Arnold said he was hopeful that the fourth quarter would be better.

"We would expect that from the fourth quarter onwards, we would get see a pick-up in export performance when the impact of the rand will start to come into effect," he said.

Export sales did not perform robustly in the third quarter, mainly because of weak demand in some traditional export markets and because of margin squeeze, Arnold said. The support for manufacturers from the government appeared mixed, according to the survey.

It also showed that while the government's renewable energy projects were providing opportunities for local producers‚ its local procurement programme was not very beneficial.

However, only 24% of the companies surveyed said they were benefiting from the government's local procurement programme.

Source: Business Day via I-Net Bridge