quarterly economic review of the agro-processing industry

agriculture,forestry & fisheriesDepartment:Agriculture, Forestry and FisheriesREPUBLIC OF SOUTH AFRICA

Volume 1, number 1

JUNE 2012

DIRECTORATE: AGRO-PROCESSING SUPPORT

Quarterly Economic Review of the

Agro-processing industry in

South Africa

January to March 2012

Quarterly economic review of

the Agro-processing industry in

South Africa

January to March 2012

Volume 1, number 1

JUNE 2012

Directorate: Agro-processing Support

DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES

2012

Published by Department of Agriculture, Forestry and Fisheries

Design and layout by Directorate Communication Services

Obtainable from the Department of Agriculture, Forestry and Fisheries Directorate Agro-processing Support Private Bag X416 Pretoria 0001

iii

Preface

The agro-processing industry is among the sectors identified by the Industrial Policy Action Plan (IPAP), the New Growth Path and the National Development Plan for its potential to spur growth and create jobs because of its strong backward linkage with the primary agricultural sector. DAFF has established a Directorate: Agro-processing Support in 2011 to complement the interventions undertaken by several governmental departments, notably, the Department of Trade and Industry. One of the main purposes of the directorate is to provide timely and updated economic information regarding agro-processing, in order to monitor the performance of the sector and provide an insight into the effects of economic policies and exogenous factors. To achieve this purpose, the directorate has started to publish a regular quar-terly review of the agro-processing industry.

This publication Quarterly Economic Review of Agro-processing Industry in South Africa: January to March 2012 is the first quarterly review by the directorate and it evaluates the performance of the eleven divisions within agro-processing during the first quarter of 2012. These divisions, which are in line with the Standard Industrial Classification, are food products, beverages, tobacco, textiles, wearing apparel, leather and leather products, footwear, wood and wood products, paper and paper products, rubber products and furniture. The main economic indicators reviewed are the changes in pro-ducer price, production volume, value of sales, capacity utilisation by large enterprises, formal employment and trade balance. A sector specific outlook is also presented for selected divisions.

Any comments and suggestions on the content of the publication are most welcome.

Dr. Simphiwe Ngqangweni

Director: Agro-processing Support

Pretoria

Disclaimer: The Department of Agriculture, Forestry and Fisheries did everything to ensure the accuracy of the information reported in this publication. The department will, however, not be liable for the results of action based on this publication.

v

Contents

Executive summary .................................................................................................................................................. vii

1. Overview of global economy ....................................................................................................................... 1

2. State of the domestic economy .................................................................................................................... 1

3. The agro-processing industry .......................................................................................................................... 4

3.1 Food products ................................................................................................................................................ 4

3.2 Beverages ..................................................................................................................................................... 7

3.3 Tobacco ......................................................................................................................................................... 9

3.4 Textiles ............................................................................................................................................................. 10

3.5 Wearing apparel ............................................................................................................................................. 12

3.6 Leather and leather products ......................................................................................................................... 14

3.7 Footwear ........................................................................................................................................................ 16

3.8 Wood and wood products ............................................................................................................................. 18

3.9 Paper and paper products ............................................................................................................................. 20

3.10 Rubber products ............................................................................................................................................. 22

3.11 Furniture .......................................................................................................................................................... 24

4. Conclusions .................................................................................................................................................... 26

References ............................................................................................................................................................... 26

Compiled by Yemane Gebrehiwet

2nd floor: Sefala Building

503 Belvedere Street, Arcadia, South Africa

All correspondence can be addressed to:

The Director: Agro-processing Support

Private bag X416, Pretoria 0001, South Africa

Tel: +27 (12) 319 8457

Fax: +27 (12) 319 8093

Email: [email protected]

This publication is also available on the internet at:

http://www.daff.gov.za

vii

Executive summary

During the first quarter of 2012 the domestic economy grew by an annualised 2,7%. The modest growth was mainly be-cause of a sharp decline in mining production (-16,8%). However, a remarkable growth recorded by the manufacturing sector (7,7%) largely supported the economic growth. The unemployment rate, on the other hand, increased from 23,9% in the fourth quarter of 2011 (2011Q4) to 25,2% in the first quarter of 2012 (2012Q1) because of the loss of 71 000 jobs and a rise in unemployment (218 000 people). Employment was generated by private households (33 000), agricultural sector (26 000) and utilities (10 000); however, a noticeable reduction occurred in construction (-71 000), manufacturing (-67 000) and community and social services (-11 000). The nominal effective exchange rate of the rand has also ap-preciated by 4% against major currencies during the 2011Q1, therefore it subdued the international price competitive-ness of local exporters. RMB/BER business confidence increased to level 52, indicating that the majority of people were satisfied with the prevailing conditions of the economy. Consumer confidence, however, remained unchanged from the previous quarter.

During the 2012Q1, total producer price inflation moderated to 8% and consumer price inflation remained at 6,2%. Food price inflation, which was 10%, remained the main contributor to consumer price inflation. The producer price for domestic output of agro-processing has showed a noticeable growth for manufactured food (10%), tobacco (10,5%) and leather and leather products (9,6%). The producer price increased moderately for rubber products (6,3%), footwear (5,7%) and wearing apparel (5%). For all other divisions, such as beverages, textiles, wood and wood products, paper and paper products and furniture producer price inflation has risen between 4% and 5%.

Compared to the previous quarter on an annualised rate, substantial production growth was recorded for footwear (46%), furniture (22%) and leather and leather products (17%). Production growth, however, was marginal for textiles (4,9%), wearing apparel (4,2%), beverages (2,2%) and rubber products (1,4%). Production volume showed little change for ag-gregated food products and it declined for paper and paper products (-10%) and wood and wood products (-7,3%). For manufacturing, food production categories, dairy and grain mill production increased by 7,3% and 2,4%, respectively, while other food products declined by 3,2% and meat, fish, fruit production remained stagnant. The utilisation capacity of the large enterprises has also increased year-on-year for most of the divisions. However, it has declined compared to the previous quarter on account of other factors such downtime owing to maintenance, lower productivity and seasonal factors. Insufficient demand, however, was the most important reason for underutilisation in all divisions.

On a quarter-to-quarter growth, agro-processing has created 2 527 formal employment positions (it increased from 426 910 to 429 437). Among the divisions, moderate employment growth occurred in wood and wood products (5,5%: 1 938 jobs) and beverages and tobacco division (5%: 1 819 jobs). Employment was created marginally in food products (1%: 1 826 jobs) and furniture (0,4%: 147 jobs). However, jobs were lost in footwear (-5,3%: 466 jobs), paper and paper prod-ucts (-4,3%: 1 369 jobs), leather and leather products (-3,7%: 191 jobs), textiles (-2,5%: 895 jobs) and wearing apparel (-0,4%: 239 jobs) divisions.

The trade balance of agro-processing was a trade surplus for beverages (R1 005 mil.), tobacco (R263 mil.) and paper products (R604 mil.) divisions during the first quarter of 2012. For all the remaining divisions, the trade balance showed a deficit and the deficit was large for food products (R4 635 mil.), wearing apparel (R3 497 mil.), rubber products (R1 678 mil.), textiles (R1 626) and footwear (R1 908 mil.) divisions. The trade deficit, however, was marginal for the furniture (R201 mil.), wood and wood products (R114 mil.) and leather and leather products (R315 mil.) divisions.

1

1Overview of global economy

The world economy showed a 4% growth in the first quarter of 2012. While the Japanese economy expanded by 4,7%, the US economy has decelerated from the growth of 3% in the 2011: Q4 to 1,9% during 2012: Q1. The Euro area, however, remained stagnant following the contraction by 1,3% in the previous quarter because of fiscal austerity and low business and consumer confidence in the region. However, the economic growth of emerging and industrialised Asian economies played a considerable role for the improvement of the global economy. Growth was strong in South Korea, Singapore, India and Thailand, though it decelerated in China. Despite the sluggish global economy recovery, the growth of these economies was supported by a strong domestic demand. Economic growth in Latin America rebounded as growth improved in Brazil, Mexico and Venezuela.

TABLE 1.1 Overview of the world economic outlook projections (percentage change)

EconomyProjections

2010 2011 2012 2013

World outputAdvanced economiesUSAEuro AreaJapanEmerging and developing economiesChinaIndiaRussiaBrazilSub-Saharan AfricaSouth Africa

5,33,23,01,94,47,5

10,410,64,37,55,32,9

3,91,61,71,4

–0,76,29,27,24,32,75,13,1

3,51,42,1

–0,32,05,78,26,94,03,05,42,7

4,12,02,40,91,76,08,87,33,94,15,33,4

Source: IMF (2012)

Table 1.1 presents the recent global outlook for 2012, and is projected to moderate from 3,9% in 2011 to 3,5% on ac-count of weaker activity during the second half of 2011 and the first half of 2012.

The Euro area is expected to be in mild recession as a result of sovereign debt losses, the impact of fiscal consolidation and loss of confidence. Economic growth is projected to be moderated from 6,5% in 2011 to 5,7% in 2012 for emerging and developing economies. Assisted by strengthening foreign demand and easier macroeconomic policies, growth is projected to rebound to 6% in 2013. These projections, however, could be much lower if the Euro crisis escalates and some geopolitical uncertainties push up oil prices.

According to the IMF, the global oil price is also projected to rise from its $104 in 2011 to $114 in 2012 and recede to $110 in 2013. However, the World Bank forecast is conservative as the oil price is expected to be $98 and $97 in 2012 and 2013 respectivelly.

World trade volume of goods and services is also expected to be moderated from a growth of 5,8% in 2011 to 4% in 2012 but rebound to 5,6% in 2013.

Consumer price inflation is projected to remain at between 1,9% and 1,7% for advanced economies and 6,2% and 5,6% for emerging and developing economies during 2012 and 2013 respectivelly.

2 State of the domestic economy

South Africa’s economy has grown by 2,7% (annualised) during 2012: Q1. The modest growth was mainly be-cause of the dismal performance of the primary sector that showed a contraction by 11,2% annualised. Excluding the volatile primary sector, the economy; however, grew by 3,8% (see Table 2.1).

The contraction of the mining sector by 17% was as a result of a decline in the production of platinum and gold owing to a long six-week strike and several safety stoppages in the major platinum plant and operation closure at some gold mines for infrastructural development. The decline by the mining sector, however, is partially offset by the agricultural sec-tor that showed a 3,4% growth owing to an increase in animal production and horticulture.

2

TABLE 2.1 South African economic growth rate (percentage change at seasonally adjusted annualised rates)

Sector2011 2012

Q1 Q2 Q3 Q4 Year Q1

Primary sectorAgricultureMiningSecondary sectorManufacturing Tertiary sectorNon-primary sector

–4,7–4,8–4,610,112,83,85,3

–6,0–9,5–4,5–6,5–8,841,3

–14,7–6,9–17,8–0,5–0,74,23,1

–1,0–5,00,73,54,23,53,5

0,0–0,40,22,12,43,63,3

–11,23,4

–16,86,47,73,03,8

Total 4,6 1,0 1,7 3,2 3,1 2,7

Source: Reserve Bank (2012)

The manufacturing sector, on the other hand, was the main sector that directed growth during 2012: Q1 by growing at a remarkable 7,7 . The expansion was mainly the result of the increase in the production of the following industrial groups: textiles, clothing, leather and footwear; petroleum, chemical products, rubber and plastic products; basic iron and steel; as well as motor vehicles, parts and accessories. The growth is also supported by the rise in the utilisation capacity of manufacturing that showed an increase from 80,1% in 2011: Q4 to 80,5% during 2012: Q1. The expansion of the manu-facturing sector, despite the weak demand from Europe, indicates the recovery of confidence on the sector. The focus of government on infrastructural development has also caused the construction sector to grow by 3,8%. The electricity, gas and water sector; however, has contracted marginally by –0,1%.

The growth of the tertiary sector has slowed from 3,6% in the previous quarter to an annualised rate of 3%. The modest growth was the result of a slower growth rate of the general government (2,3%); transport, storage and communication

(2,5%) and commercial sector (3%). The growth of general government slowed because of moderation of em ployment from the previous quar-ter when the census raised govern-ment staff. The finance, insurance, real estate and business service sec-tor, however, showed a marked growth of 4,1% owing to the improvement on the lending activity of the banking sector and the rise in activities of the equity, bond and other financial mar-kets.

Source: Statistics SA (2012a)

During 2012: Q1, the unemployment rate reached 25,2%, an increase of 1,3 percentage points from the previ-ous quarter. Total employment de-creased by 75 000 and the number of unemployed persons rose to 282 000. Though an increase in unem-ployment is expected following sea-sonal gains from December festivities, employment has increased by 304 000 and unemployment has risen by 3,7% (162 000) year-on-year. Among the sectors that generated employ-ment during 2011: Q1, were private households (33 000), agricultural sec-

tor (26 000) and utilities (10 000). Severe job losses occurred in the construction (–71 000) manufacturing –67 000) and community and social services –11 000)

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23

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25

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26

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%

FIG. 2.1 Quarterly unemployment rate

-6

-4

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12

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FIG. 2.2 Total CPI and PPI inflation

CPI PPI

Source: Statistics SA (2012 b, 2012 c)

3

Producer price inflation moderated to 8,1% during 2012: Q1 after consecutively steady rises for the past two quarters. The rise in international commodity prices during the previous quarter has fuelled producer price inflation to 10,1%. The mod-eration of international commodity prices and the appreciation of the exchange rate slowed the growth of producer price inflation during 2012: Q1. In addition, the subdued producer price inflation was supported by the decline in the producer price for agriculture and mining output. Consumer price inflation, on the other hand, remained similar to the previous quarter (6,3%). Among the products that still put pressure on consumer price inflation is food, whose level re-mained at 10% during 2012: Q1. The rise in the prices of bread and cereals (11,2%) and meat (12%) are the main factors contributing to the higher food price inflation. In addition, other consumer products whose price jumped were petrol (21%) and electricity and other fuels (15,6%). The consumer price inflation for processed and unprocessed food products remained the same at 10,1% during 2012: Q1.

TABLE 2.2 Exchange rates of the rand (percentage change)

Monetary unit30 Jun. 2011 to30 Sep. 2011

30 Sep. 2011 to31 Dec. 2011

31 Dec. 2011 to31 Mar. 2012

31 Mar. 2012 to31 May 2012

Weighted average1

EuroUS dollarChinese yuanBritish poundJapanese yen

–12,5–9,5

–15,5–16,6–13,2–19,3

0,73,3

–1,3–2,6–0,2–0,3

4,42,55,95,92,0

12,0

–6,6–3,1–9,8–8,8–7,1

–13,4

Source: Reserve Bank (2012)

The nominal effective exchange rate of the rand increased by 4,4% during 2012: Q1. A firm appreciation of the rand was observed against the Japanese yen, US dollar and Chinese yuan. The appreciation of the exchange rate is mainly the result of the improvement in the international sentiment and risk appetite after the approval of Greece’s second bailout package of 130 billion euro and a sustained low interest rate in the advanced economies. Furthermore, the real effective exchange rate appreciated by 0,8% during the first quarter of 2012. As a result, the international price competitiveness

of domestic exporters was subdued. The trend, however, is reversed as the rand has depreciated against major currencies in April and May on ac-count of renewed uncertainty in the global financial markets (Reserve Bank, 2012).

The RMB/BER composite business con-fidence index, which is regularly sur-veyed by the Bureau for Economic Research (BER), increased by 14 indi-ces and reached 522 during 2012: Q1. The general business mood has therefore improved for the first time af-

ter the 2011: Q1. An increase of the index is noted in five of the sectors included in the survey. These are business confi-dence for new vehicle dealers (+29), building contractors (+12), retail (+5), wholesale (+10) and manufacturing (+12). The net balance3 of consumer confidence index, however, remained at level 5, which is the same as the previous quar-ter. The changes in index on the three components of the consumer confidence are given in brackets. Confidence on the economic position in South Africa during the next 12 months (+4); financial position of households during the next 12 months (–1) and rating of present time to buy durables (–4).

1 Reserve Bank calculates the nominal effective exchange rate of the rand based on trade in and consumption of manufactured goods be-tween South Africa and its most important trading partners. It is calculated against fifteen currencies. The weights of the five major currencies are in brackets: Euro (34, 82), US dollar (14, 88), Chinese yuan (12, 49), British pound (10, 71), Japanese yen (10, 12)

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%

FIG. 2.3 RMB/BER composite business confidence index

2 BER calculates business confidence index by asking respondents to rate current business condition as “satisfactory” or “unsatisfactory”. Then the index is derived as a gross percentage of the respondents responding “satisfactory”. A value of 50 is indicative of neutrality, 100 indica-tive of extreme confidence and 0 of extreme lack of confidence. An index greater than 50 shows the majority is satisfied with the prevailing economic conditions.

3 BER calculates the net balance statistic by subtracting the percentage of the respondents replying “down” from the percentage replying “up” to a particular question. Respondents are asked to compare the current quarters’ experience to that of a year ago. A positive net balance implies an improvement (i.e. positive year-on-year growth) and vice versa. Therefore the net balance varies from -100 to 100 where -100 is the most negative response; 0 is a situation of no change; and 100 is the most positive response.

Source: BER (2012)

4

3 The agro-processing industry

FAO (1997) defines agro-processing as a subset of manufacturing that processes raw materials and intermediate products derived from the agricultural sector. Therefore the agro-processing industry basically transforms products origi-nating from agriculture, forestry and fisheries. According to the Standard Industrial Classification, the agro-processing in-dustry comprises the following eleven divisions: food products, beverages, tobacco, textiles, wearing apparel, leather and leather products, footwear, paper and paper products, wood and wood products, rubber and furniture. This section reviews the economic performance of these divisions during the first quarter of 2012.

3.1 FOOD PRODUCTS

The producer price index for manufactured food products for domestic output is presented in Table 3.1. While the price index of overall food products for domestic output has increased by 10,5% year-on-year, some specific products such as meat (18,5%), grain mill products (16%) and ‘other food products’ (14,4%) have shown the highest annual growth rates. On the other hand, prepared and preserved fish (1,4%), coffee and tea (5,3%) and sugar (4,8%) increased mod-estly. The fats and oils group is the only food category whose producer price declined (–1,8%) year-on-year. The quarter-to-quarter changes for the overall food products is 2,5% and for the price changes of each categories see Table 3.1.

TABLE 3.1 Producer price index for domestic output of South African processed food (Base 2000=100)

Food

Indices % change between

2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Food (total)Coffee and teaDairy productsFats and oilsFruit and vegetable productsGrain mill products and bakery productsMeat and meat productsOther food productsPrepared and preserved fishSugar

202,9190,7206,2276,3164,5177,1231,5199,6185,3176,3

218,7200,2214,1260,3172,5198,5282,7218,2189,2182,5

224,2200,8221,4271,4174,3205,6274,3228,3187,9184,7

10,55,37,4

–1,85,9

16,118,514,41,44,8

2,50,23,44,31,03,6

–2,94,6

–0,71,2

Source: Statistics SA (2012c)

The annual producer price for exported food products declined by 3,6% during the first quarter of 2012. A higher growth rate, however, was observed for grain mill products and for prepared and preserved fish products, where both increased by 15,5% and 6,5%, respectively. Sugar products, on the other hand, showed the largest annual decline (–7,3%). Similarly the quarterto-quarter growth rate for the exported food products has declined by 1,5%, but showed an increase only for fruit and vegetable products (4,4%) and grain mill products (4,4%) (see Table 3.2).

TABLE 3.2 Producer price index for exported commodities of South African processed food (Base 2000=100)

Food


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Food (total)Dairy productsFats and oilsFruit and vegetable productsGrain mill products and bakery productsMeat and meat productsOther food productsPrepared and preserved fishSugar

161,0143,1199,4132,3207,8120,1173,8147,0156,7

157,6143,1199,4126,7229,9122,7175,3157,4150,9

155,2143,1199,4132,3240,1121,0175,3156,6145,2

–3,60,00,0

–0,0215,50,70,86,5

–7,3

–1,50,00,04,44,4

–1,40,0

–0,5–3,7


The producer price for imported food products has showed a 4% annual growth. Among the food categories, imported meat (13,8%) and dairy products (7,2%) prices have increased considerably compared to others (see Table 3.3). On a

5

quarter-to-quarter growth, there is a general decline (little change) of imported food prices for most food products, ex-cept dairy products that showed a 4,5% growth.

TABLE 3.3 Producer price index for imported commodities of South African processed food (Base 2000 = 100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Food (total)Coffee and teaDairy productsFats and oilsFruit and vegetable productsGrain mill products and bakery productsMeat and meat productsOther food productsPrepared and preserved fishSugar

174,5139,7168,5217,9156,0152,2192,0139,9121,1174,5

181,6139,7173,0217,6156,0162,6223,8133,9121,1174,5

181,3139,7180,7219,3156,0161,2218,6134,6121,1174,5

3,90,07,20,60,05,9

13,8–3,80,00,0

–0,20,04,50,80,0

–0,9–2,30,50,00,0


A physical volume of production by the food products division is presented in Figure 3.1. Among the food groups, dairy products has shown a 7% annu-al growth followed by grain mill prod-ucts (4,3%) and meat, fish, fruit, vegetable as well as fats and oils (3,2%). Other food products, however, have declined by 1,4%. Compared to the previous quarter, the production of dairy products and grain mill grew by an annualised4 7,3% and 2,4%, re-spectively. There was, however, no change of production volume for meat, fish, fruit, vegetables and fats and oils; and a slight decline (–3,2%) for ‘other food products’.

A seasonally adjusted nominal value of sales for food products is given in Fig. 3.2. The value of sales for total food products has increased by 13,4% year-on-year. The value of sales of meat and others increased by 9,2% followed by dairy (6,5%), oth-er food products (3,7%) and grain mill products (2,1%). Compared to the previous quarter, the growth in the value of sales is modest for total food products (3,2%).

However, ‘other food products’ increased by 6,5% followed by dairy and grain mill products, which increased by 4,6% and 4,9%, respectively. The value of sales for meat and others, on the other hand, declined slightly (–0,7%).

5060708090

100110120130

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Inde

x (2

005

= 10

0)

FIG. 3.1 Seasonally adjusted physical volume of production: food products

Meat, fish, fruit etc Dairy products Grain mill products Other food products

Source: Statistics SA (2012d)

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R m

illio

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FIG. 3.2 Seasonally adjusted value of sales (current prices): food products

Meat, fish, fruit etc Dairy products Grain mill products Other food products

4 An annualised rate is the growth rate that would register if the rate of change from the current quarter to the previous quarter is maintained for the entire year.


6

Total formal employment in the food manufacturing sector increased from 174 679 in 2011: Q1 to 177 117 in 2012: Q1. Therefore, employment grew by 1,4% year-on-year and gen-erated 2 438 jobs. Most of the growth was derived from the product groups (meat, fish, fruit, vegetables, oils and fats) and ‘other food products’ where employment increased by 1,8% and 2% year-on-year. Formal employ-ment in grain mill products, however, declined by 3,5% year-on-year and dairy products showed little change. Compared to the previous quarter,

formal employment has only increased by 1% merely owing to a considerable growth in meat, fish, fruit and oils and fats (5,9%). Grain mill, dairy products and ‘other food products’, however, shed formal employment by 1,9%, 1,5% and 1%, respectively from the previous quarter.

TABLE 3.4 Utilisation and reasons for underutilisation of production capacity by large enterprises: food products (percentage)

Period Utilisation

Reasons for underutilisation

Total underutilistion

Shortage of

Insufficient demand

OtherRaw materials

Labour

Skilled Semi- and unskilled

2011: Q12011: Q42012: Q1

80,585,582,0

19,514,518,0

2,22,32,0

1,21,41,6

0,10,20,1

11,08,2

10,0

5,02,44,4

Source: Statistics SA (2012f)

The utilisation and reasons for underutilisation of production capacity by large enterprises5 of food products is presented in Table 3.4. It showed that utilisation capacity in 2012: Q1 increased year-on-year; but decreased from the previous quarter. Among the reasons for underutilisation, insufficient demand is the major reason followed by other reasons (such as downtime owing to maintenance, lower productivity and seasonal factors). Shortage of raw materials is also the third main reason for underutilisation followed by shortage of skilled labour.

The quarterly trade balance of pro-cessed food products is given in Fig. 3.4. Both exports and imports increased by 6,6% and 17,9% year-on-year respectively. From the previous quarter, however, both ex-ports and imports have declined by 15% and 10,2%, respectively. Therefore, the trade deficit which was R3,572 million in 2011: Q1 in-creased to reach a R4,635 million deficit in 2012: Q1.

5 Large enterprises included in the survey are those with turnover greater than R100 million per annum

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FIG. 3.3 Number of formal employment: food products

Production, processing and preservation of meat, fish, fruit, vegetables, oils and fatsDairy productsGrain mill products, starches and starch products and prepared animal fatOther food products

Source: Statistics SA (2012e)

0

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: Q3

2011

: Q4

2012

: Q1

R m

illio

n

Figure 3.4: Quarterly trade balance of food products

Export Import

Source: Quantec Easy Data (2012)

7

TABLE 3.5 Net balance6 of BER manufacturing survey: food products

2011: Q1

2011: Q2

2011: Q3

2011: Q4

2012: Q1

2012: Q2*

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business conditionNumber of factory workersFixed investmentExpected volume of goods imported in 12 months’ timeExpected volume of goods exported in 12 months’ timeExpected real investment in machinery and equipment in 12

months’ timeExpected business condition in 12 months’ timeBusiness confidence7

63–18706012–2–430292175

6156

7639727539

–18111039

710

1081

663

6468–110

44231

873

6266

5124625422

–623

126

2036

959

36133036

924–83324

–1455

4350

23–22

4–16–21

–11328

* Expected Source: BER (2012)

A survey of food manufacturing by the BER is presented in Table 3.5. The survey showed a positive growth for production, sales, and exports during 2012: Q1 year-on-year, which is supported by the data presented above, except employment, where actual data shows a slight increase. During 2012: Q1, business confidence by the food division was neutral and much lower than the previous four quarters. The outlook for the next quarter shows that export might be moderate year-on-year. However, there is a positive expectation for domestic production, fixed investment and employment. Possible exchange rate depreciation during the second quarter, however, could cushion the decline in exports.

3.2 BEVERAGES

The producer price index of beverages for domestic output, exported and imported commodities is presented in Table 3.6. The producer price index for domestic output products increased by 3,9% year-on-year mainly as a result of the growth of non-alcoholic beverages (6%) compared to alcoholic beverages (3%). The producer price index for both ex-ported and imported commodities, however, declined by 1,3% and 6,2%, respectively. Compared to the previous quarter, exported and imported commodities showed little change; however, beverages for domestic output increased by 1,7%.

TABLE 3.6 Producer price index for beverages (Base 2 000 = 100)


2011: Q1 2011: Q4 2012: Q12011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Domestic output

Beverages (total)Alcoholic beveragesNon-alcoholic beverages

197,7207,3171,1

202,1209,2179,6

205,6213,5181,4

3,93,06,0

1,72,01,0

Exported commodities

Beverages (total) 129,9 121,3 121,8 –6,2 0,5

Alcoholic beverages 130,5 120,7 121,3 –7,0 0,5

Non-alcoholic beverages 121 121 121 0 0

Imported commodities

Beverages (total) 160,5 157,8 157,8 –1,7 0

Alcoholic beverages 167,1 163,2 163,2 –2,3 0

Non-alcoholic beverages 109,6 109,6 109,6 0 0


6 See footnote 37 See footnote 2

8

The seasonally adjusted production volume of beverages is given in Figure 3.5. Production of beverages has grown by 6% year-on-year. Compared with the previous quarter, however, beverage production vol-ume has showed an annualised 2,2% growth.

The nominal value of beverages sales given in Figure 3.6, shows that the val-ue of sales increased by 11,4% year-on-year. It also increased by 1,1% from the previous quarter. The rise in value of sales is mainly because of a rise in production volume.

Formal employment in the beverages and tobacco8 division is presented in Fig. 3.7. The beverages and tobacco divisions are among, only a few agro-processing divisions, that generated formal employment during 2012: Q1. Employment grew by 3,8% year-on-year (from 36 583 to 37 990 in 2012: Q1: an increase of 1 407 jobs) and by 5% from the previous quarter.

TABLE 3.7 Utilisation and reasons for underutilisation of production capacity by large enterprises: beverages division (percentage)

Period Utilisation


Total underutilisa-tion

Shortage of

Insufficient demand

OtherRaw materials

Labour

SkilledSemi- and unskilled

2011: Q12011: Q42012: Q1

78,882,881,9

21,217,318,1

2,22,32,0

1,22,01,0

0,30,10,3

15,88,2

10,5

1,14,64,2



5060708090

100110120130140

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.5 Seasonally adjusted physical volume of production: beverages


02 0004 0006 0008 000

10 00012 00014 00016 00018 00020 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.6 Seasonally adjusted value of sales (current prices): beverages

Source: Statistics SA (20123)

29 000

30 000

31 000

32 000

33 000

34 000

35 000

36 000

37 000

38 000

39 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.7 Number of formal employment: beverage and tobacco products

8 Because of a lack of disaggregated data for beverages and tobacco, the aggregate data of formal employment for both beverages and tobacco are presented.

9

The utilisation and reasons for underutilisation of production capacity by large enterprises of beverages is presented in Table 3.7. The data revealed that utilisation capacity during 2012: Q1 increased year-on-year; but slightly declined from the previous quarter, mainly because of insufficient demand. Other reasons (such as downtime because of mainte-nance, lower productivity and seasonal factors) are also the second main reason for underutilisation followed by a short-age of raw materials.

The trade balance of beverages has been positive for many years. During 2012: Q1, export of beverages in-creased by a considerable amount of 16,2%, and imports rose by 8,7% year-on-year. Because of a substan-tial growth of exports, the trade bal-ance has increased from a surplus of R810 million in 2011: Q1 to R1,005 million in 2012: Q1 (see Figure 3.8). Compared to the previous quarter, however, both exports and imports have declined by 23% and 15,7%, respectively.

TABLE 3.8 Net balance of BER manufacturing survey: beverages

2011: Q1

2011: Q2

2011: Q3

2011: Q4

2012: Q1

2012: Q1

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business conditionsNumber of factory workersFixed investmentExpected volume of goods imported in 12 months’ timeExpected volume of goods exported in 12 months’ timeExpected real investment in machinery and equipment

in 12 months’ timeExpected business condition in 12 months’ timeBusiness confidence

613075612946

–23106754–5

5776

6043806673–78

215572

–13

5972

7980867965–8–9207886

0

5770

829

9212821–887

–4717

8

7524

891994892317

0139913

4

915

818

988708

Source: BER (2012)

The survey of the beverages division by the BER presented in Table 3.8, shows an expected growth for the production volume, domestic sales, exports and imports of beverages year-on-year, which is in line with the actual data. Business confidence, however, was also very low during the 2012: Q1. Though the expected volume of imports by far exceeds exports for the year, the outlook for the second quarter is in a positive territory, though marginally.

3.3 TOBACCO

The producer price index for domestic output, exported and imported commodities of tobacco products is presented in Table 3.9. While there has not been a change in the producer price index for both exported and imported commodities during 2012: Q1, the producer price index for domestic output increased by 10,5% year-on-year and by 2,5% from the previous quarter.

TABLE 3.9 Producer price index for tobacco products (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Domestic output

270,0 285,3 292,5 10,5 2,5


180,8 180,8 180,8 0 0

0

500

1 000

1 500

2 000

2 500

3 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.8 Quarterly trade balance of beverages

Export Import

Source: Quantec EasyData (2012)

10


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1


122,5 122,5 122,5 0 0


The trade balance of tobacco prod-ucts reveals that it remained positive for the past four years (see Figure 3.9). During 2012: Q1, exports and imports increased by 31,8% and 28,3% year-on-year, respectively. Compared to the previous quarter, imports increased by 14,6% and exports expanded by 7,7%. The trade balance is currently a surplus of R262.9 million.

3.4 TEXTILES

The producer price index of domestic output, exported and imported textliles is given in Table 3.10. Producer prices for domestic output and export commodities increased by 4,5% year-on-year. For imported commodities, however, the producer prices showed a modest increase (2%). From the products of textiles, yarn and thread showed the highest rise in the producer price for exported products (20,2%). All categories of textile products showed marginal growth in pro-ducer price when compared to the previous quarter.

TABLE 3.10 Producer price index for textiles (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1 2011: Q4 and 2012: Q1

Domestic output

Textiles and made-up goodsTextile articles other than apparelYarn and thread, woven and tufted

textile fabric (prepared for spinning)

148,3143,3163,4

154,4146,7176,5

155,0148,0175,4

4,63,37,4

0,40,9

–0,6


Textiles and made-up goodsTextile articles other than apparelYarn and thread, woven and tufted textile fabric (prepared for spinning)

182,5120,9254,9

189,3123,9302,6

190,2124,4306,4

4,22,8

20,2

0,50,41,3


Textiles and made-up goodsTextile articles other than apparelYarn and thread, woven and tufted

textile fabric (prepared for spinning)

119,0133,7110,9

120,7138,0111,6

121,4139,1112,2

2,04,01,1

0,60,80,5

Source: Statistics SA (2012a)

Physical volume of production for textiles has been gently declining since 2008 (see Figure 3.10). During 2012: Q1, textiles pro-duction declined by 3,1% year-on-year. However, other textile products increased by 2,3%. Compared to the previous quar-ter, textiles showed a further decline by an annualised 4,7% and other textile products expanded by an annualised 8,8%.

050

100150200250300350400450500

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.9 Quarterly trade balance of tobacco

Export Import

Source: Quantec Easydata (2012)

50

60

70

80

90

100

110

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.10 Seasonally adjusted physical volume of production: textiles

textiles Other textile products


11

The seasonally adjusted nominal val-ue of sales for textiles and other textile products showed that both increased by 3,3% and 5,8% year-on-year, re-spectively. In addition, both have in-creased by 3,2% and 0,2%, respectively, compared with the previ-ous quarter. While the increase in the sales value of textiles is merely the re-sult of the increase in price, for other textiles, however, the growth in volume of production has played a role.

During 2012: Q1, formal employment by preparations and spinning of textile fibres and other textiles division de-clined by 6,5% and 5,1% year-on-year, respectively. Compared to the previous quarter, employment in both divisions has also contracted by 4,4% and 2%, respectively. Therefore formal employment in textiles has declined from 34 686 in 2011: Q1 to 32 788 in 2012: Q1 (a reduction of 1 898 jobs).

TABLE 3.11 Utilisation and reasons for underutilisation of production capacity by large enterprises: textiles (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2011: Q12011: Q42012: Q1

70,872,171,9

29,227,928,1

3,61,21,2

0,90,80,7

0,30,10,3

21,222,723,4

3,33,12,2


The survey on the utilisation of production capacity by big enterprises in the textiles division showed that, it had the lowest utilisation capacity of 71,9% during 2012: Q1. Insufficient demand is noted as the fundamental cause of underutilisation in the sector.

South Africa has been a net importer of textiles and the trend has continued during 2012: Q1. While export has in-creased by 9,1%, imports have in-creased markedly by 13,4% year- on-year. Hence the trade deficit reached R1 626 million during 2012: Q1 from R1 416 million in 2011: Q1. Compared to the previous quarter, both exports and imports have declined by 19,3% and 7,1%, respectively.

0500

1 0001 5002 0002 5003 0003 5004 0004 500

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n FIG. 3.11 Seasonally adjusted value of sales (current prices): textiles

textiles Other textile products


0

5 000

10 000

15 000

20 000

25 000

30 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.12 Number of formal employment: textiles

Preparation and spinning of textile fibres; weaving of textiles Other textiles


0

500

1 000

1 500

2 000

2 500

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.13 Quarterly trade balance of textiles

Export Import


12

TABLE 3.12 Net balance of the BER manufacturing survey: textiles

2011: Q1 2011: Q2 2011: Q3 2011: Q4 2012: Q1 2012: Q2

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business conditionsNumber of factory workersFixed investmentBusiness confidenceExpected volume of goods imported in 12

months timeExpected volume of goods exported in 12

months timeExpected real investment in machinery and

equipment in 12 months’ timeExpected business condition in 12 months’

time

-423

-35-41

-9-40-11346644

-8

28

19

-27-31-26-23–30-31-19254164

2

21

17

-76-318

-76-3

-78-39

071

-13

30

46

-4

23-642019

-63-19

-9-524

7

-18

-12

-44

134

1913

46

-127

6066

17

-11

-28

41018

410-7

-4224

The net balance of a manufacturing survey of textiles conducted by the BER shows a decline in the growth of domestic production, sales and exports year-on-year during 2012: Q1. Though, the decline has been partially revealed from the actual data presented above, employment has not been generated in the sector as anticipated in the survey. The busi-ness confidence in the sector was also very low in the sector during 2012: Q1. The outlook for the division for the 2012: Q2 reveals that most of the variables, except employment, will show positive year-on-year growth.

3.5 WEARING APPAREL

Producer prices of wearing apparel for domestic output, exports and imported commodities increased by 4,9%, 3,2% and 2,7% year-on-year, respectively. Among the products, knitted or crocheted fabrics have showed higher growth of producer prices for domestic output (19,1%), while other wearing apparel increased markedly for exported commodities (10,6%). Compared to the previous quarter, the producer price for domestic output has declined by 0,4% and it re-mained unchanged for imported commodities. Exported commodities, however, have increased by 1,6% (see Table 3.13).

TABLE 3.13 Producer price index for wearing apparel (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Domestic output

Wearing apparelKnitted or crocheted fabricsOther wearing apparel

128,9132,5128,5

135,9164,0127,6

135,3157,8128,8

4,919,1

0,2

–0,4–3,80,9



111,8118,3117,1

113,6118,3123,5

115,4118,3129,6

3,20

10,6

1,604,9



121,4119,2125,1

124,7124,4124,7

124,7124,4124,7

2,74,4

–0,3

000


13

The production volume of knitted or crocheted fabrics declined significant-ly by 14,7% year-to year, while wearing apparel modestly increased by 1,9%. Compared to the previous quarter, however, production volume of both knitted fabrics and wearing apparel in-creased by an annualised rate of 10% and 3,4%, respectively.

The nominal value of sales of wearing apparel and knitted fabrics increased by 4,1% and 2,9% year-on-year, re-spectively. Both products have also showed a 1,6% and 3,4% growth com-pared to the previous quarter.

During 2012: Q1, formal employment by knitted fabrics division declined by 6,6% year-on-year. However, wearing apparel increased employment by 2% year-on-year (see Figure 3.16). Knitted fabrics also showed a 5,9% de-cline from the previous quarter, while there has been little change by the wearing apparel division. Therefore the total employment in both divisions, which had been 52 401 in 2011: Q1, has increased by 605 to reach 53 006 in 2012: Q1.

TABLE 3.14 Utilisation and reasons for underutilisation of production capacity by large enterprises: wearing apparel (percentage)

Period Utilisation


Total underu-tilisation

Shortage of

Insufficient demand

OtherRaw materials

Labour


2011: Q12011: Q42012: Q1

76,781,077,5

23,319,122,5

0,81,01,1

1,30,81,1

1,31,11,3

15,812,414,0

4,13,75,1


5060708090

100110120

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.14 Seasonally adjusted physical volume of production: wearing apparel

Wearing apparel Knitted, crocheted articles



0500

1 0001 5002 0002 5003 0003 5004 0004 5005 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.15 Seasonally adjusted value of sales (current prices): wearing apparel

Wearing apparel Knitted, crocheted articles


0

10 000

20 000

30 000

40 000

50 000

60 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG 3.16 Number of formal employment: wearing apparel

Knitted and crocheted fabrics and articles

Wearing apparel, except fur; dressing and dying of fur, articles of fur

14

The utilisation of production capacity by the large enterprises of wearing apparel has slightly increased year-on-year, but decreased from the previous quarter (see Table 3.14). Among the reasons for underutilisation, there was an increase in the percentage point of other reasons (such as downtime owing to maintenance, lower productivity and seasonal fac-tors). However, insufficient demand remains the main cause of underutilisation.

Similar to the textiles, South Africa has remained a net importer of wearing apparel. During 2012: Q1, exports grew by 8,8% and imports jumped by 34% year-on-year. Therefore, the trade deficit, which was R2 578 million dur-ing 2011: Q1, has increased to R3 496.7 million in 2012: Q1. Compared to the previous quarter, exports have declined by 27%, while imports rose by 14,1%.

TABLE 3.15 Net balance of the BER manufacturing survey: clothing

2011: Q1

2011: Q2

2011: Q3

2011: Q4

2012: Q1

2012: Q2

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business conditionsNumber of factory workersFixed investmentBusiness confidenceExpected volume of goods imported in 12 months timeExpected volume of goods exported in 12 months timeExpected real investment in machinery and equipment

in 12 months’ timeExpected business condition in 12 months’ time

30-43428-416301497183884

37

20-32420-54

18545614

-2043

10

1767131731

-50264648122166

48

444045616348595274

-16-771

55

-334624

-31-72-38-507937485460

3

23542823-520

686

Source: BER (2012)

The BER manufacturing survey for clothing shows that export and domestic production would increase year-on-year dur-ing 2012: Q1. Employment would also decrease year-on-year in the clothing division. This is also supported by the actual data on the production volume, employment and exports. Business confidence by the division was also low (below 50) during 2012: Q1. The outlook for 2012: Q2 shows that there would be a modest growth in year-on-year in most variables except in export order volume received.

3.6 LEATHER AND LEATHER PRODUCTS

Producer price index for domestic output, exported and imported commodities of leather and leather products is given in Table 3.16. While domestic output and imported commodities increased by 9,6% and 6,5% year-on-year, respec-tively, exported commodities hasn’t showed any change. Compared to the previous quarter, however, domestic output declined marginally, and imported commodities increased by 6,5%.

TABLE 3.16 Producer price index for leather and leather products (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Domestic output

112,3 123,3 123,1 9,6 -0,2

0500

1 0001 5002 0002 5003 0003 5004 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.17 Quarterly trade balance of wearing apparel

Export Import


15


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2011: Q4 and


98,3 98,3 98,3 0 0


133,4 133,4 142,1 6,5 6,5


During 2012: Q1, physical volume of production for leather and leather products increased by 6,5% year-on-year, and it grew by an annualised 17% compared to the previous quar-ter (see Figure 3.18).

Seasonally adjusted value of sales for leather and leather products in-creased by 9,7% year-on-year and by 2,7% from the previous quarter (see Figure 3.19).

Formal employment in leather and leather products division fell significant-ly by 12% year-on-year. Moreover, it declined by 3,7% from the previous quarter. Thus the division which gener-ated 5 612 formal employment in 2011: Q1 lost 700 jobs and, currently, it employs 4 916 people.


50

60

70

80

90

100

110

120

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.18 Seasonally adjusted physical volume of production: leather and leather products


4 000

4 200

4 400

4 600

4 800

5 000

5 200

5 400

5 600

5 800

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.20 Number of formal employment: leather and leather products

0

200

400

600

800

1 000

1 200

1 400

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.19 Seasonally adjusted value of sales (current prices): leather and leather products


16

TABLE 3.17 Utilisation and reasons for underutilisation of production capacity by large enterprises: leather and leather products (percent-age)

Period Utilisation


Total underutilisation

Shortage of

Insufficient demand

OtherRaw materials

Labour

SkilledSemi- and unskilled

2011Q1 76,5 23,5 5,6 0,7 1,2 15,6 0,4

2011Q4 75,5 24,5 3,1 0,5 0,9 14,9 5,1

2012Q1 72,3 27,8 2,6 0,9 0,8 21,6 1,8


The utilisation of production capacity by leather division declined both year-on-year and from the previous quarter. While insufficient demand remained the key reason behind low capacity utilisation, shortage of raw materials declined in per-centage points as a reason for underutilisation in the sector during 2012: Q1 (see Table 3.17).

South Africa has continued to be a net importer of leather and leather prod-ucts (see Figure 3.21). During 2012: Q1, exports and imports increased by 13.3% and 11,9% year-on-year, re-spectively. Thus, the trade deficit in 2012: Q1 reached R315 million com-pared with R284 million during 2011: Q1. Compared to the previous quar-ter, imports have declined sharply by 28% and exports fell by 8,4%.

3.7 FOOTWEAR

During 2012: Q1, producer price for domestic output and imported commodities of footwear increased by 5,7% and 4.8% year-on-year, respectively. However, there has been no change on the producer price for exported commodities. Similarly, producer price for domestic producer price and imported commodities increased by 2,6% and 1,3%, respec-tively, and producer price remained unchanged for exported commodities compared to the previous quarter.

TABLE 3.18 Producer price index for footwear (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Domestic output

156,6 161,3 165,5 5,7 2,6


166,7 166,7 166,7 0 0


122,9 127,2 128,8 4,8 1,3


0100200300400500600700800

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG 3.21 Quarterly trade balance of leather and leather products

Export Import


17

The volume of production of footwear increased by 8,4% year-on-year during 2012: Q1 (see Figure 3.22). It also showed an annualised 46,2% growth from the previous quarter.

Nominal value of sales of footwear shows that it increased by 13,6% year-on-year, and it showed an 11% growth from the previous quarter (see Figure 3.23).

Formal employment declined from 8 625 in 2011: Q1 to 8 313 in 2012: Q1. Thus, it fell by 3,6% year-on-year, and it also decreased by 5,3% from the pre-vious quarter (see Figure 3.24).

TABLE 3.19 Utilisation and reasons for underutilisation of production capacity by large enterprises: footwear (percentage)

Period Utilisation


Total underu-tilisation

Shortage of

Insufficient demand

OtherRaw materials

Labour


2011Q1 87,0 13,0 1,7 2,6 0 8,7 0

2011Q4 89,0 11,0 1,3 0,6 0 8,6 0,5

2012Q1 90,4 9,6 0,9 0,5 0 8,2 0



50

60

70

80

90

100

110

120

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.22 Seasonally adjusted physical volume of production: footwear


0

200

400

600

800

1 000

1 200

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.23 Seasonally adjusted value of sales (current prices): footwear


6 000

6 500

7 000

7 500

8 000

8 500

9 000

9 500

10 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.24 Number of formal employment: footwear

18

Utilisation of production capacity by footwear division shows that it utilised the highest percentage of its capacity. Utilisation capacity in the division increased year-on-year and from the previous quarter (see Table 3.19). Similar to other divisions, insufficient demand remains the main reason for underutilisation.

South Africa has been a net importer of footwear (see Figure 3.25). Imports sharply increased from R1 498 million in 2011: Q1 to R1 965 million in 2012: Q1. Thus, it rose by 31,1% year-on-year. Imports have also increased by 4% from the previous quarter.

3.8 WOOD AND WOOD PRODUCTS

Producer price for wood and wood products, domestic output and imported commodities increased by 4,7% and 2,9% year-on-year, respectively. Exported commodities, however, has declined by 1,8% year-on-year. Compared to the previ-ous quarter, a 1% growth was observed for domestic output and imported commodities, while exported commodities declined by 2,2%.

TABLE 3.20 Producer price index for wood and wood products (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and 2012: Q1

2011: Q4 and 2012: Q1

Domestic output

193,6 200,6 202,7 4,7 1,0


182,2 182,9 178,9 -1,8 -2,2


140,4 142,9 144,5 2,9 1,1


Seasonally adjusted volume of pro-duction for sawmilling and planing of wood grew by 5,5% year-on-year. However, it showed an annualised 0,6% decline compared to the previ-ous quarter. For products of wood, on the other hand, production volume has declined by 1,4% year-on-year, and by an annualised 7,3% from the previous quarter (see Figure 3.26).

0

500

1 000

1 500

2 000

2 500

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.25 Quarterly trade balance of footwear

Export Import



5060708090

100110120

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.26 Seasonally adjusted physical volume of production: wood and wood products

Sawmilling and planing of wood Products of wood

19

Figure 3.27 shows that seasonally ad-justed value of sales for sawmilling and planing of wood increased by 10,3% year-on-year. In addition, it in-creased by 1,1% from the previous quarter. For products of wood, a 3,1% growth was registered year-on-year and 0,5% from the previous quarter. The rise in the value of sales for prod-ucts of wood is mainly the result of the price increase.

Formal employment by sawmilling and planing of wood division in-creased by 8,8% year-on-year. Further more, the division showed a 14,6% growth from the previous quar-ter. Products of wood, however, shed formal employment by 5,7% year-on-year and by 1,7% from the previous quarter (see Fig. 3.28). The aggregate formal employment in the division therefore increased slightly from 37 141 in 2011: Q1 to 37 392 in 2012: Q1.

TABLE 3.21 Utilisation and reasons for underutilisation of production capacity by large enterprises: wood and wood products (percentage)

Period Utilisation


Total underutilisa-tion

Shortage of

Insufficient demand

OtherRaw mate-rials

Labour


2011: Q1 80,6 19,4 2,3 1,5 0 11,4 4,2

2011: Q4 85,8 14,3 1,4 1,1 0 7,6 4,2

2012: Q1 81,3 18,7 1,2 1,7 0,4 9,9 5,5


Utilisation of production capacity by the wood and wood products division increased slightly year-on-year. Though insuf-ficient demand remains the main reason for underutilisation, other reasons such as downtime because of maintenance, lower productivity and seasonal factors became prominent during 2012: Q1. A shortage of skilled labour is also high-lighted as the third main reason for the underutilisation.

0500

1 0001 5002 0002 5003 0003 5004 0004 5005 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n FIG. 3.27 Seasonally adjusted value of sales (current prices): wood and

wood products




10 000

12 000

14 000

16 000

18 000

20 000

22 000

24 000

26 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.28 Number of formal employment: wood and wood products


20

South Africa has been a net exporter for wood products up to 2006. However, export and import values became relatively close since 2007. During the first quarter of 2012 exports and imports increased by 16,5% and 21,6% year-on-year, respectively. Therefore, the trade balance be-came a deficit in 2012: Q1 by R114 million. Compared to the previous quarter, exports have also decreased by 9,2% and imports have increased by 8,6%. Therefore the trade deficit has widened from the previous quar-ter that registered a surplus.

3.9 PAPER AND PAPER PRODUCTS

The producer price for domestic output and imported commodities of paper and paper products increased by 4,4% and 3,4% year-on-year, respectively. The producer price for exported commodities, however, declined both year-on-year and from the previous quarter by 1,2% and 0,6%, respectively. Producer prices for domestic output and imported com-modities, however, have also increased by 1,4% and 1,1%, respectively, from the previous quarter.

TABLE 3.22 Producer price index for paper and paper products (Base 2000=100)


2011: Q1 2011: Q4 2012: Q1 2011: Q1 and2012 Q1

2011: Q4 and 2012: Q1

Domestic output

165,0 170,1 172,4 4,4 1,4


154,6 153,6 152,7 -1,2 -0,6


128,4 131,3 132,8 3,4 1,1


Figure 3.30 shows that the seasonally adjusted volume of production for paper and paper products has mere-ly increased by 1% year-on-year. How ever, it decreased by an annual-ised 10% from the previous quarter.


0

200

400

600

800

1 000

1 200

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n FIG. 3.29 Quarterly trade balance of wood and wood products

Export Import

5060708090

100110120130

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG 3.30 Seasonally adjusted physical volume of production: paper and paper products


21

Seasonally adjusted value of sales of paper and paper products increased by 8,8% year-on-year, despite mar-ginal growth of volume of production (see Figure 3.31). However, the value of sales declined by 0,1% from the previous quarter mainly because of a decline in the production volume.

Formal employment in the paper and paper products division declined by 2,6% year-on-year and by 4,3% from the previous quarter (see Figure 3.32). Thus the number of employment de-creased from 31 550 in 2011: Q1 to 30 742 in 2012: Q1 (808 jobs lost).

TABLE 3.23 Utilisation and reasons for underutilisation of production capacity by large enterprises: paper and paper products (percent-age)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2011: Q1 83,7 16,3 0,6 0,4 0,1 7,8 7,4

2011: Q4 89 11 0,8 0,3 0,1 5 4,8

2012: Q1 84,6 15,4 0,9 1,3 0,1 7,2 6,1


Table 3.23 presents the utilisation of production capacity by the paper and paper products division. There has been little change year-on-year. However, a shortage of skilled labour has increased in the percentage point for reasons of underu-tilisation. The increase in underutilisation capacity from the previous quarter is mainly attributed to insufficient demand and other reasons such as downtime as a result of maintenance, lower productivity and seasonal factors.

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n FIG. 3.31 Seasonally adjusted value of sales (current prices): paper and

paper products



25 000

26 000

27 000

28 000

29 000

30 000

31 000

32 000

33 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG 3.32 Number of formal employment: paper and paper products

22

South Africa has been a net exporter of paper and paper products since 1988. During 2012: Q1, export and im-port increased by 3,2% and 6,9% year-on-year, respectively. However, both have declined from the previous quarter by 10% and 3,6%, respective-ly. The trade balance during 2012: Q1 is a surplus of R604 million.

TABLE 3.24 Net balance of the BER manufacturing survey: paper and paper products

2011: Q1 2011: Q2 2011: Q3 2011: Q4 2012: Q1 2012: Q2

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business conditionsNumber of factory workersFixed investmentBusiness confidenceExpected volume of goods imported in 12

months timeExpected volume of goods exported in 12

months timeExpected real investment in machinery and

equipment in 12 months’ timeExpected business condition in 12 months’

time

-423

-35-41

-9-40-11346644

-8

28

19

-27-31-26-23–30-31-19254164

2

21

17

-76-318

-76-3

-78-39

071

-13

30

46

-4

23-642019

-63-19

-9-524

7

-18

-12

-44

134

1913

46

-127

6066

17

-11

-28

41018

410-7

-4224

Source: BER (2012)

The survey of manufacturing of paper and paper products division by BER presented in Table 3.24 shows that production, exports and domestic sales volumes would be higher year-on-year. In addition, employment would decline year-on-year. This finding is also confirmed by the actual data presented above. Business confidence was positive during 2012: Q1 (above 50). The outlook for the second quarter is slightly positive for exports, but remained grim for employment and domestic sales year-on-year growth. Expected real investment in the division is also very slim.

3.10 RUBBER PRODUCTS

Producer price of rubber products for domestic output increased by 6,3% year-on-year; however, both producer prices for exported and imported commodities showed little change (see Table 3.25). Similarly, all producer prices have shown marginal change from the previous quarter.

TABLE 3.25 Producer price index of rubber products (Base 2000=100)


2011 Q1 2011 Q4 2012 Q1 2011 Q1 and 2012 Q1 2011 Q4 and 2012 Q1

Domestic output

223,3 236,5 237,4 6,3 0,4


186,0 186,0 186,3 0,1 0,2


125,0 125,3 125,4 0,2 0,1


0500

1 0001 5002 0002 5003 0003 5004 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n FIG. 3.33 Quarterly trade balance of paper and paper products

Export Import


23

Fig. 3.34 shows that the seasonally ad-justed volume of production of rubber products has increased by 4,8% year-on-year and by merely an annualised 1,4% from the previous quarter.

The seasonally adjusted value of sales of rubber products increased by 15% year-on-year but decreased margin-ally by 1,5% from the previous quarter (see Figure 3.35).

Formal employment in the rubber products division marginally declined by 0,7% year-on-year and by 0,3% from the previous quarter. Therefore employment which was 12 896 in 2011: Q1 has only shed 91 jobs in 2012: Q1.

TABLE 3.26 Utilisation and reasons for underutilisation of production capacity by large enterprises: rubber products (percentage)

Period Utilisation


Total underutilisation

Shortage of

Insufficient demand

OtherRaw materials

Labour


2011: Q1 83,2 16,8 0,5 0 0 14,3 2,0

2011: Q4 90,0 10,0 0,3 0 0 8,8 0,8

2012: Q1 87,4 12,6 0,7 0,1 0 11,5 0,3


50

60

70

80

90

100

11020

08: Q

1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.34 Seasonally adjusted physical volume of production: rubber products



0500

1 0001 5002 0002 5003 0003 5004 0004 500

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.35 Seasonally adjusted value of sales (current prices): rubber products


10 000

10 500

11 000

11 500

12 000

12 500

13 000

13 500

14 000

14 500

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.36 Number of formal employment: rubber products

24

Table 3.26 presents the utilisation of production capacity by large enterprises of rubber products. The utilisation capacity has increased year-on-year mainly owing to a slight increase in demand and declining downtime because of mainte-nance, lower productivity and seasonal factors. Insufficient demand, however, played a major role in the reduction of the utilisation capacity from the previous quarter.

South Africa has been a net importer of rubber products for more than three decades. During 2012: Q1, imports and exports have increased by 32,2% and 7,8% year-on-year (see Figure 3.37). The trade deficit grew from R1 145.8 million in 2011: Q1 to R1 678.5 million in 2012: Q1. Compared to the previous quarter, exports have de-clined by 17,5%, while imports grew by 4,6%.

3.11 FURNITURE

The producer price index of furniture for domestic output increased by 3,9% year-on-year and it showed a marginal in-crease from the previous quarter. While the producer price for exported commodities did not show a change, imported commodities rose by 0,6% year-on-year and by 1,7% from the previous quarter (see Table 3.27).

TABLE 3.27 Producer price index for furniture (Base 2000=100)


2011Q1 2011Q4 2012Q1 2011Q1 and 2012Q1 2011Q4 and 2012Q1

Domestic output

157,5 162,5 163,6 3,9 0,7


100,1 100,1 100,1 0 0


92,4 91,3 92,9 0,6 1,7


Figure 3.38 presents seasonally adjust-ed physical volume of production by the furniture division. During 2012: Q1, furniture production reached the high-est level since 2009. Production vol-ume increased by 1,2% year-on-year and it grew by an annualised 22,3% from the previous quarter.

0

500

1 000

1 500

2 000

2 500

3 000

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.37 Quarterly trade balance of rubber products

Export Import

Source: Statistics SA (2012)

50

60

70

80

90

100

110

120

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

Inde

x (2

005

= 10

0)

FIG. 3.38 Seasonally adjusted physical volume of production: furniture


25

Following the growth of the produc-tion volume, seasonally adjusted nominal value of furniture sales in-creased by 4,4% year-on-year and 3,1% from its previous quarter (see Figure 3.39).

During 2012: Q1, formal employment in the furniture division grew by 3% year-on-year and by 0,4% from the previous quarter (see Figure 3.40). Formal employment, which had been 33 365 in 2011: Q1 reached 34 368 in 2012: Q1 (an additional 1 000 jobs).

TABLE 3.28 Utilisation and reasons for underutilisation of production capacity by large enterprises: furniture (percentage)

Period Utilisation



Shortage ofInsufficient demand

OtherRaw materials

Labour


2011: Q1 80,7 19,3 0 1,1 0 17,7 0,5

2011: Q4 90,6 9,4 0 1,1 0 7,4 0,9

2012: Q1 81,7 18,3 0 1,1 0 16,7 0,5


Table 3.28 shows that utilisation capacity has slightly increased year-on-year. However, it has declined considerably from the previous quarter mainly owing to insufficient demand. A shortage of skilled labour remains the second reason for underutilisation in the furniture division.

The trade balance of furniture has been relatively close to neutral, as shown in Fig. 3.41. For the past three consecu-tive quarters, however, the deficit has been widening. In 2012: Q1, imports have increased by 18,5% year-on-year, while exports declined by 15,6% year-on-year. The trade deficit has changed from a trade surplus of R62 million to a trade deficit of R201 million. Compared to the previous quarter, both exports and imports have declined by 19% and 24%, respectively.

0

500

1 000

1 500

2 000

2 500

3 000

3 500

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n FIG. 3.39 Seasonally adjusted value of sales (current prices): furniture



28 000

29 000

30 000

31 000

32 000

33 000

34 000

35 000

36 000

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

FIG. 3.40 Number of formal employment: furniture

0

200

400

600

800

1 000

1 200

1 400

2008

: Q1

2008

: Q2

2008

: Q3

2008

: Q4

2009

: Q1

2009

: Q2

2009

: Q3

2009

: Q4

2010

: Q1

2010

: Q2

2010

: Q3

2010

: Q4

2011

: Q1

2011

: Q2

2011

: Q3

2011

: Q4

2012

: Q1

R m

illio

n

FIG. 3.41 Quarterly trade balance of furniture

Export Import

26

TABLE 3.29 Net balance of BER manufacturing survey: furniture

2011: Q1 2011: Q2 2011: Q3 2011: Q4 2012: Q1 2012: Q2

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business conditionsNumber of factory workersFixed investmentBusiness confidenceExpected volume of goods imported in 12 months

timeExpected volume of goods exported in 12 months

timeExpected real investment in machinery and

equipment in 12 months’ timeExpected business condition in 12 months’ time

27-51

927

-51-1836204161

-13

34

-3

-57-65-67-57-60-66-15-572030

-40

-67

-42

-10-51

-9-10-49-92

2-104344

-6

-16

-50

6-12

521

-24-25

090

22

29

-12

-25

57-75758-7

-43-19

93

30

6

4

-60

35-32635-3

-50-11

8

Source: BER (2012)

The net balance of manufacture survey by the BER shows that the outlook for the second quarter remained positive for domestic sales and production. However, it is slim for the employment and export year-on-year growth. The outlook of investment and export in the division for the entire year is slightly positive. Business confidence was the lowest within the agro-processing during 2012: Q1.

4 Conclusions

Agro-processing showed an expansion of production in most divisions during the first quarter of 2012. The pro-ducer price for domestic output has increased by 10% for food, tobacco and leather products. For the other divisions, however, the growth ranges from 4% to 6%. Compared to the previous quarter, the production volume of the agro-pro-cessing industry on an annualised rate has declined for paper, wood and textiles. However, it showed a substantial growth in footwear, furniture and leather and leather products division. Marginal growth was also recorded by the rubber, bever-ages and food products divisions.

Total formal employment in agro-processing marginally increased from the previous quarter. Among the divisions that created formal jobs were beverages, wood, food and furniture. Jobs, however, were shed in the paper, leather, textiles, wearing apparel and rubber divisions. The percentage of utilisation of production capacity by large agro-processing enterprises increased year-on-year but decreased from the previous quarter on account of seasonal factors. Apart from three divisions (beverages, tobacco and paper) that showed a trade surplus, eight of the remaining divisions had a trade deficit during the first quarter of 2012.

REFERENCES

BER (2012), Manufacturing Survey. Bureau for Economic Research, University of Stellenbosch.

FAO (1997), The State of Food and Agriculture. Rome: Food and Agriculture Organisation.

IMF (2012), World Economic Outlook, April 2012. International Monetary Fund.

Quantec EasyData (2012), RSA International Trade. Accessed in June 2012.

Reserve Bank (2012), Quarterly Bulletin, June 2012. South African Reserve Bank.

Statistics SA (2012a), Quarterly Labour Force Survey, various issues. Statistics South Africa.

Statistics SA (2012b), Consumer Price Index, various issues. Statistics South Africa.

Statistics SA (2012c), Producer Price Index, various issues. Statistics South Africa.

Statistics SA (2012d), Manufacturing: Production and Sales, various issues. Statistics South Africa.

Statistics SA (2012e), Quarterly Employment Statistics, various issues. Statistics South Africa.

Statistics SA (2012f), Manufacturing: Utilisation of Production Capacity by Large Enterprises. Statistics South Africa.

quarterly economic review of the agro-processing industry

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