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Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 20 11 By Dr Iraj Abedian Pan-African Investme

Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 20 11 By Dr Iraj Abedian Pan-African Investment & Research Services(Pty) Ltd. Introduction Overall Manufacturing Business Confidence Current South African Manufacturing Trends

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Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 20 11 By Dr Iraj Abedian Pan-African Investme

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  1. Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 2011 By Dr Iraj Abedian Pan-African Investment & Research Services(Pty) Ltd.

  2. Introduction Overall Manufacturing Business Confidence Current South African Manufacturing Trends Manufacturing Survey Results: Q3-2011 Concluding Remarks Outline

  3. Introduction: Q3-2011 Manufacturing Circle Survey Profile of Survey Participants

  4. Overall Manufacturing Business Confidence

  5. Current South African Manufacturing Trends

  6. Rebound in Q3-2011 Manufacturing Output 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.

  7. Manufacturing Employment in Q3-2011 Employment Trends in the Manufacturing Sector 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.

  8. Manufacturing Outlook Remains Hesitant Kagiso Purchasing Manager’s Index 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.

  9. Manufacturing Survey: Q3-2011

  10. 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.

  11. Demand Conditions:Domestic vs. Exports Sales

  12. 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.

  13. 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.

  14. 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.

  15. 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.

  16. Financial Conditions • There was a 10% increase in the share of respondents accessing finance • at between JIBAR plus 3% and JIBAR plus 6%.

  17. 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.

  18. Thank you for your attention

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