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Johannesburg - Manufacturing business confidence doubled in the third quarter, but is still very low.
The Manufacturing Business Confidence Index compiled by the Bureau for Economic Research (BER) rose to 22 points in the third quarter, compared with 11 points in the first.
"The survey indicates a mild but clear change in the trend when compared with the first- and second-quarter results. Although manufacturing activities are still under pressure, these results confirm that the worst is over," states BER economist Christelle Grobler.
The index is consistent with the July manufacturing figures published by Statistics South Africa (SSA) last week.
According to SSA, in the first month of the current quarter the manufacturing index fell only 13.7% year on year, compared with 17.2% year on year in June.
On a monthly basis the index gained 3.3%.
Grobler notes that the base metals subsector showed the biggest upturn owing to an improvement in domestic sales and production volumes.
Employment in the manufacturing sector also improved. According to the BER, workforces are shrinking more slowly than previously, and the average working hours of a factory worker have improved slightly.
Among the four provinces with the largest concentration of manufacturing activities, the Western Cape improved the most - from 24 to 45 points - in manufacturing sector business confidence, largely because of an improvement in export sales volumes.
In Gauteng and KwaZulu-Natal confidence rose only one point to 9 index points, mainly because of declining profitability.
The entire manufacturing sector, however, showed an improvement in profitability during the third quarter, Grobler reports.
"Respondents indicated that local selling prices were in line with those of a year ago."
Manufacturing business confidence improved by 3 points to 12 in the Eastern Cape.
According to the BER, the last time survey respondents were as positive as they are now about expected business conditions for the next 12 months was in the fourth quarter of 2007.
Although fixed investment in the manufacturing sector is still very low, it is falling slightly more gradually than previously.
Sectors like wood, printing and publication, chemical products, non-ferrous minerals and transport equipment already show higher levels of fixed investment thanks to increased demand.
- Sake24.com
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