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Johannesburg - The short term outlook for manufacturing conditions is bleak, according to the Manifacturing Circle Survey on manufacturing business conditions for the second quarter of 2014.
It was presented by Pan African Investment and Research Services (Pairs) chief economist Dr Iraj Abedian on Thursday.
The survey reveals that 74% of respondents indicated employment would either be kept the same or job cuts would be likely over the next 12 months.
Key reasons for the weak outlook include uncertainty in the labour market, elevated wage and input costs, competition from imported goods, low productivity of labour, a lack of adequate skills, and faltering consumer spending.
The survey found that in the second quarter of 2014 there were a lof of downbeat business conditions in the manufacturing sector.
This was owing to factors such as industrial action in the platinum industry, weak consumer demand and elevated input costs.
As a result, profitability was under strain during the second quarter of 2014.
Relative to the outcome in the second quarter of 2013, domestic and export demand for South African manufactured goods performed dismally in the second quarter of 2014.
Among the factors that affected demand were a number of construction projects reaching their terminal phase over the quarter, the poor performance of the domestic motor industry as well as increased competition in the global market.
Shortages of adequate skills and raw materials, electricity and water disruption as well as a fall in labour productivity characterised supply conditions experienced by the survey participants in the second quarter of 2014.
The majority of respondents said they did not benefit from the government’s local procurement programme in the second quarter of 2014, despite it being deemed important to the growth of manufacturing operations.
- Fin24
