Manufacturing Sector Remains Fragile

Manufacturing Sector Remains Fragile

Conditions in the manufacturing sector remain fragile but there is hope of improvement. The sector continues to face challenges of elevated input costs and sluggish demand. But improving conditions in the Europe and growing demand in Africa hold a silver lining.

The majority of manufacturers surveyed in the second quarter reported that while conditions remained challenging, there were signs of improvement. This is on the back of domestic and export demand, mainly into Africa.

The job outlook in the sector also remains bleak. The sector shed some 18 000 jobs in the second quarter and on-going labour volatility brings about a risk of mechanisation threatening job prospects.

But there are positive signs emerging from South Africa’s traditional trading partners.  Pan-African Holdings Chief Economist Iraj Abedian says: “The optimism that our manufacturers expect in the next two years is because globally, there is what appears to be a synchronised improvement in Europe, in United States, Japan and of course China remains positive and importantly for our manufacturers is Africa.”

The PG Group manufacturer of building and auto glass says the weak rand and a growing Africa market are supportive. PG Group CEO Stewart Jennings says: “We now have investments in every country south of the equator, and we are very encouraged by Africa. It’s also good to see the GDP growth in Africa and we do believe that in the next few years Africa is going to be a very important foundation of our exports.”

Businesses expect the weak conditions to continue in the short term on increased input costs, poor performances in the mining sector and aggressive foreign competition.