BUSINESS - COMPANIES
| 2013-08-09Manufacturing sentiment declines in second quarter
Chamwe Kaira
THE manufacturing sentiment index declined to -14,89 in the second quarter of this year from 19,24 recorded at the end of the previous quarter, Simonis Storm Securities said in a report yesterday. The present situation index also declined sharply to -35,24 from 2, 65 in the previous quarter.
“The expectations index was on a downward trend as well showing that manufacturers have a very pessimistic view concerning production and productivity within the sector over the next few months,” the report said.
According to the report manufacturers who experienced an increase in production volumes declined to 13% from 28% in the previous quarter. Export levels from manufacturers have declined significantly over the past quarter. Capacity utilisation increased slightly to 69% from 68% from the previous quarter. Fewer manufacturers expected volumes to increase over the next quarter.
The number of manufacturers who experienced an increase in their production volumes in the second quarter dropped to 13% from 28% in the first quarter. Furthermore, the number of respondents experiencing decreasing manufacturing volumes rose from 16% to 31%.
The report said six percent of respondents recorded above-normal order levels, lower than the 16% recorded in the previous quarter. A significant number of respondents (31%) indicated that orders have decreased which has sent a worrying signal for future expectations.
The report said that 17% of manufacturers reported above-normal export orders, which is slightly higher than 11% in the first quarter. The number of respondents reporting a decrease in order levels rose to 33% from 17% in the first quarter.
The report said most manufacturers reported normal stock levels (75%) of finished goods in the second quarter.
“There has been an increase in those that reported above-normal levels of stock of 13% in the second quarter from eight percent in the previous quarter.”
The positive outlook for production volume expectations worsened in this quarter with 25% of respondents expecting an increase as compared to 28% in the first quarter. Those who expected volumes to decline represented 31%, much higher than the 16% in the first quarter.
The number of respondents expecting higher selling prices in the coming quarter increased from 40% in the first quarter to 56% in the second quarter. Expectancy for a decreased selling price has dropped from 12% in the previous quarter to six percent this quarter.
The report said the outlook for employment has moderated; the number of respondents indicating they will increase the number of employees fell to six percent down from 16% in the first quarter.
“Those who expect to reduce employees rose significantly from eight percent to 25% in the current quarter.
The outlook for general business conditions for the next quarter has further deteriorated, with 13% respondents expecting business conditions to worsen. Those who expect improvement in their business situation has fallen from 32% in the first quarter to 25% in the second quarter.”
The report said fewer manufacturers are expecting production volumes to grow this coming quarter, coupled with lower global and South African economic growth, suggests uncertainty amongst manufacturers. Most manufacturers surveyed thought that business conditions would either remain the same or worsen over the next six months, with less employment growth expected to take place.
“Insufficient domestic demand is the first most common factor, with 22% of respondents saying it contributes to limiting production. Competitive imports remain a cause for concern for local manufacturers. Shortage of skilled labour is a growing concern amongst manufacturers with 16% of the respondents being pessimistic about the current available skill levels.
“Uncertainty of the economic environment also featured as a limiting factor of production. For the second quarter, 48% of manufacturers’ inputs originate in Namibia and 41% from the rest of SACU. The percentage of products sold locally as opposed to exports increased from 59% to 68% from first quarter to the second quarter.
“Export sales improved to SACU from 19% to 23% on a quarterly basis. Export sales to SADC and the rest of the world have declined by six and seven percentage points respectively since the first quarter.”
“The expectations index was on a downward trend as well showing that manufacturers have a very pessimistic view concerning production and productivity within the sector over the next few months,” the report said.
According to the report manufacturers who experienced an increase in production volumes declined to 13% from 28% in the previous quarter. Export levels from manufacturers have declined significantly over the past quarter. Capacity utilisation increased slightly to 69% from 68% from the previous quarter. Fewer manufacturers expected volumes to increase over the next quarter.
The number of manufacturers who experienced an increase in their production volumes in the second quarter dropped to 13% from 28% in the first quarter. Furthermore, the number of respondents experiencing decreasing manufacturing volumes rose from 16% to 31%.
The report said six percent of respondents recorded above-normal order levels, lower than the 16% recorded in the previous quarter. A significant number of respondents (31%) indicated that orders have decreased which has sent a worrying signal for future expectations.
The report said that 17% of manufacturers reported above-normal export orders, which is slightly higher than 11% in the first quarter. The number of respondents reporting a decrease in order levels rose to 33% from 17% in the first quarter.
The report said most manufacturers reported normal stock levels (75%) of finished goods in the second quarter.
“There has been an increase in those that reported above-normal levels of stock of 13% in the second quarter from eight percent in the previous quarter.”
The positive outlook for production volume expectations worsened in this quarter with 25% of respondents expecting an increase as compared to 28% in the first quarter. Those who expected volumes to decline represented 31%, much higher than the 16% in the first quarter.
The number of respondents expecting higher selling prices in the coming quarter increased from 40% in the first quarter to 56% in the second quarter. Expectancy for a decreased selling price has dropped from 12% in the previous quarter to six percent this quarter.
The report said the outlook for employment has moderated; the number of respondents indicating they will increase the number of employees fell to six percent down from 16% in the first quarter.
“Those who expect to reduce employees rose significantly from eight percent to 25% in the current quarter.
The outlook for general business conditions for the next quarter has further deteriorated, with 13% respondents expecting business conditions to worsen. Those who expect improvement in their business situation has fallen from 32% in the first quarter to 25% in the second quarter.”
The report said fewer manufacturers are expecting production volumes to grow this coming quarter, coupled with lower global and South African economic growth, suggests uncertainty amongst manufacturers. Most manufacturers surveyed thought that business conditions would either remain the same or worsen over the next six months, with less employment growth expected to take place.
“Insufficient domestic demand is the first most common factor, with 22% of respondents saying it contributes to limiting production. Competitive imports remain a cause for concern for local manufacturers. Shortage of skilled labour is a growing concern amongst manufacturers with 16% of the respondents being pessimistic about the current available skill levels.
“Uncertainty of the economic environment also featured as a limiting factor of production. For the second quarter, 48% of manufacturers’ inputs originate in Namibia and 41% from the rest of SACU. The percentage of products sold locally as opposed to exports increased from 59% to 68% from first quarter to the second quarter.
“Export sales improved to SACU from 19% to 23% on a quarterly basis. Export sales to SADC and the rest of the world have declined by six and seven percentage points respectively since the first quarter.”
