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Manufacturing confidence improves

Nov 29 2012 16:01

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Johannesburg - Manufacturing confidence has improved, but remains at a low level, the Bureau for Economic Research (BER) said on Thursday.

"The BER Manufacturing Survey for the fourth quarter showed that manufacturing business confidence continued its recovery by ticking up five index points to 38," it said in a statement.

Despite the rise, confidence remained at a low level and the index stayed well below the 47 index points seen in the first quarter of 2012.

Domestic demand came in much stronger than anticipated, with the indicators for sales and order volumes improving significantly during the fourth quarter.

"Export performance remained under pressure and both export sales and order volumes came in well below expectations," said BER economist Lisette IJssel de Schepper.

Producers seemed to anticipate a global economic recovery, she said.

Also, they might be anticipating the weaker rand exchange rate to continue.

A net majority expected the volume of exports to increase over the next year.

Production volume accelerated during the fourth quarter, with the production volume indicator returning to levels seen earlier in the year.

Despite the pick-up, most firms reported fewer factory workers compared to the same quarter a year ago.

Further retrenchments were expected.

Capacity utilisation improved during the survey quarter.

Manufacturers reported general business conditions had deteriorated, but their expectations for general business conditions a year ahead improved.

Manufacturers expected fixed investment levels to decline over the next year.

"Given increased capacity utilisation and an improvement in the rating of business conditions in 12 months time, the downscaling of investment plans is likely due to increased uncertainty," said IJssel de Schepper.

This was evident from the sharp rise in the number of firms reporting the general political climate was a constraint on business activity.

In total, 73% of firms rated the current political climate as a serious constraint, the highest reading since 1993, and well above the long-term average of 48%.

bureau for economic research
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