Manufacturing confidence still fragile: survey

The Manufacturing Circle's quarterly bulletin showed that current and short- to medium-term manufacturing confidence remained fragile influenced by factors ranging from high input costs to ineffective volume planning amid sluggish demand.

About 68 manufacturers‚ the majority of whom employ 500 people or less‚ participated in survey in the second quarter.

"The majority of those who participated report that their input costs and the rate at which input costs are going up‚ is a major concern‚" said Pan African chief economist Iraj Abedian‚ whose company helped compile the survey.

The bulletin reported resilience in SA's manufactured exports during the second quarter‚ mainly supported by the weak rand.

Exports rise

There was an increase in exports to the eurozone‚ a key market for local goods‚ while some respondents observed increases in their exports to Africa‚ especially Nigeria and Kenya.

Abedian said exports to Europe showed some positive signs but there appeared to be a synchronised improvement in the economies of most countries.

The eurozone emerged from a recession in the second quarter according to figures released on Wednesday (14 August)‚ with gross domestic product expanding 0.3% following six quarters of negative growth.

Abedian said the local manufacturing sector was undergoing a technical transformation from being a labour intensive sector to one that is mechanised.

He said this was evident in continued job losses which were accompanied by expanding output. "The automation drive is not unique to manufacturing it even applies to mining‚" Abedian said.

Manufacturers still expect conditions to remain weak in the next three to six months on elevated input costs and a poor performance by sectors such as agriculture and manufacturing.

They are‚ however‚ more positive about conditions over the next two years when economic growth is expected to have lifted.