Background

The Manufacturing Confidence Index is based on a manufacturing survey of small-to-large sized South African manufacturers.

The manufacturing survey is constructed by Pan-African Investment and Research Services (PAIRS) on behalf of the Manufacturing Circle.

This is the first quarterly update and it covers the latest trends within the manufacturing sector, as gathered from key informants during the fourth quarter of 2010.

A survey containing, both quantitative and qualitative questions was completed by 20 CEOs from small to large sized South African manufacturing companies, with a revenue base of between R300 million to R10 billion.

KEY CONCLUSIONS

• Despite the improved global and domestic conditions, manufacturing confidence remains low, with only 1% of the manufacturing CEOs characterizing their current business environment as strong.
• The South African manufacturing sector showed a sturdy recovery in the 4th quarter of 2010, expanding by 4.4% over the quarter.  
• Even though the outlook remains favourable for the first quarter of 2011, this growth is coming off a low base in early 2010 and is not a true representation of an underlying trend.  Therefore, the pace of recovery in domestic manufacturing is expected to remain moderate and contained for the greater part of 2011, partly due to a combination of a persistently strong domestic currency and slower export sales. 
• The manufacturing sector is responsible for an estimated 17 percent of total employment and is the third largest employment generating sector in the economy –after finance and wholesale & retail trade sectors. Given its relevance as a catalyst in boosting the supply-side of the economy, in areas of job creation and investment growth, for the South African economy to achieve sustainable growth and equitable shared income from factors of production, a robust manufacturing sector is necessary.