agriculture, forestry & fisheries January to March 2013 Volume 2, number 1 June 2013 DIRECTORATE: AGRO-PROCESSING SUPPORT

Transcription

1 Quarterly Economic Review of the Agro-processing industry in South Africa January to March 2013 Volume 2, number 1 June 2013 DIRECTORATE: AGRO-PROCESSING SUPPORT agriculture, forestry & fisheries Department: Agriculture, Forestry and Fisheries REPUBLIC OF SOUTH AFRICA

2

3 Quarterly Economic Review of the Agro-processing industry in South Africa January to March 2013 Volume 2, number 1 June 2013 Directorate: Agro-processing Support DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES

4 2013 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

5 P reface 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 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 quarterly review of the agro-processing industry. This publication Quarterly Economic Review of the Agro-processing Industry in South Africa: January to March 2013 evaluates the performance of the 11 divisions within agro-processing during the first quarter of 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 producer 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. Herbital Maluleke Acting 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

6

7 C ontents Executive summary... vii 1. Introduction Overview of global economy State of the domestic economy The agro-processing industry Food products Beverages Tobacco Textiles Wearing apparel Leather and leather products Footwear Wood and wood products Paper and paper products Rubber products Furniture Conclusion References Compiled by Dr Yemane Gebrehiwet with inputs from: Deborah Makola, Dorothy Soois, Kamohelo Mathibeli and Vhutshilo Nelwamondo Sefala Building Office 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) Fax +27 (12) HerbitalM@daff.gov.za This publication is also available on the internet at: vii

8

9 Executive summary Supported by the growth in the advanced economies, the global economy grew by 2,7% during the first quarter of The domestic economy, however, slowed from 2,1% during the preceding quarter to 0,9% during the period mainly because of the contraction in the growth of secondary sectors. The primary sector, however, recovered following the growth in the production of mining activities. During the period, the nominal effective exchange rate of the rand further dropped by 5,7% and the unemployment rate increased to 25,2% compared with 24,9% in the previous quarter. The total producer and consumer price inflation increased slightly from the previous quarter to reach 5,6% and 5,7%, respectively, during the first quarter of The producer price inflation of agro-processing products for domestic output increased markedly for leather products (20,8%) and food products (6,1%). For the remaining agro-processing products the producer price increased lower than the average inflation rate. Most of the divisions in the agro-processing industry curtailed production during the first quarter of 2013 compared to the previous quarter. Among the divisions with a contracted volume of production are meat, fish, fruit ( 1,9%), dairy products ( 0,1%), grain mill products ( 1.0%), beverages ( 0,9%), other textile products ( 0,5%), knitted and crotched articles ( 8,0%), paper and paper products ( 3,4%), sawmilling ( 7,1%), wood products ( 3,7%), rubber products ( 0,2%) and furniture ( 9,0%). Conversely, a quarter-to-quarter production growth was observed in footwear (8,3%), wearing apparel (2,6%), other food products (9,3%) and textiles (1,0%). Mainly because of the subdued production volume of most agro-processing products, the nominal value of sales of agro-processing (excluding tobacco sales) decreased marginally by 0,4% compared to the previous quarter. Therefore, the total value of sales declined from R million in the preceding quarter to R million during the first quarter of Value of sales subsided in the knitted and crochet articles category ( 8,2%), leather and leather products ( 7,6%), furniture ( 6,5%), sawmilling and planing of wood ( 4,4%), wood products ( 4,1%), meat, fish, fruit ( 1,4%), other food products ( 2,6%), textiles ( 1,2%) and paper and paper products (-0,9%). However, value of sales increased for the rubber products (4,2%), footwear (4,6%), other textiles (3,6%), dairy (3,3%), beverages (1,7%), wearing apparel (0,9%), and grain mill products (0,6%) divisions. The trade deficit of agro-processing sector decreased moderately from R million in the previous quarter to R million during the first quarter of 2013 because of a sizable decline in imports from 10,2% in the previous quarter to 8,8% relative to exports that plunged from 5,4% in the previous quarter to 8.0%. Among the divisions that showed a contraction in exports are footwear ( 27,4%), food products ( 16,3%), furniture ( 9,5%), beverages ( 10,8%), rubber ( 8,7%), textile products ( 6,7%), wood and wood products ( 6,3%) and wearing apparel ( 4,0%). However, exports increased for tobacco (11%), paper and paper products (9,7%) and leather and leather products (9,0%). Imports dropped for food products ( 24,4%), beverages ( 18,3%), tobacco products (-9,5%), paper products ( 3,7%), leather and leather products ( 15,9%), furniture (-2%) and textiles ( 1,9%). Imports, however, surged for wood and wood products (15,6%), footwear (11,2%) and rubber products (9,9%). As a result, the trade balance for food, tobacco, leather and leather products, paper and paper products and furniture improved during the first quarter of The agro-processing industry shed formal jobs compared to the preceding quarter following a contraction in production and export of most agro-processing divisions. Formal jobs were lost in food ( 0,2%: 299 jobs), furniture ( 6,7%: jobs), wood ( 3,5%: jobs), textiles ( 2,5%: 800 jobs), paper products ( 2,2%: 678 jobs), wearing apparel ( 0,1: 62 jobs), leather products ( 2%: 93 jobs). However, jobs were created in the beverages and tobacco (6,6%: jobs), footwear (6%: 545 jobs) and rubber products (3,7%: 442 jobs) divisions. ix

10

11 1 Introduction Global economic growth increased slightly during the first quarter of 2013 prompted by the growth of advanced economies. The South African economy, however, slowed compared to the previous quarter as a result of the contraction of the manufacturing sector. The primary sector, on the other hand, rebounded despite a poor performance by the agricultural sector during the period. This quarterly review assesses the economic performance of the agro-processing industry given a moderate global economic growth and slowed domestic economic activities registered during the first quarter of The quarterly review is organised as follows: the following section and section three summarise the global economy and the state of the domestic economy, respectively, during the first quarter of Section four provides the impact of the global and domestic economy on the eleven divisions of the agro-processing industry in brief. The review presented in this section assesses how the performance of the global and domestic economy during the quarter affected the producer price, production volume, sales, capacity utilisation, trade and employment of each division. In addition, an outlook for the second quarter of 2013 is presented for selected divisions. The outlook presents the expectation of domestic sales, export, investment and employment, among others, for the next quarter compared to their level a year ago. 2Overview of global economy Owing to the stronger growth in advanced economies, particularly the US, Japan and Germany during, the global growth accelerated marginally by 2,7% during the period, following a 2,6% growth recorded in the previous quarter. Individually, Japan s economy showed a remarkable growth of 4,4% during first quarter of 2013 as a result of an increase in exports and domestic consumption. At the same time, the US growth accelerated to 2,4% following firm growth in domestic demand. On the other hand, the subdued growth of France and Italy further contracted economic growth in the Euro area. The sluggish growth registered by major emerging economies, especially China, Brazil and Russia during, also led to a decrease in the contribution of emerging-market economies to the global growth during the period. As presented in Table 2.1, the revised global economic outlook for 2012 and 2013 projected that the global economy will accelerate from 3,3% in 2013 to 4,0% in 2014 as a result of subsidence in factors underlying weak activity. Owing to labour stoppages in South Africa, floods in Nigeria and political instability in South Sudan and Mali, the expected growth in 2013 was revised downwards for sub-saharan Africa. The Euro area is also expected to remain in the current fiscal crisis because of numerous factors such as political resistance in several countries, the high social cost of youth unemployment and banking sector problems. TABLE 2.1: Overview of the world economic outlook projections (percentage change) Projections World output Advanced economies US Euro area Japan Emerging market and developing economies China India Russia Brazil Sub-Saharan Africa South Africa 4,0 1,6 1,8 1,4 0,6 6,4 9,3 7,7 4,3 2,7 5,3 3,5 3,2 1,2 2,2 0,6 2,0 5,1 7,8 4,0 3,4 0,9 4,8 2,5 3,3 1,2 1,9 0,3 1,6 5,3 8,0 5,7 3,4 3,0 5,6 2,8 4,0 2,2 3,0 1,1 1,4 5,7 8,2 6,2 3,8 4,0 6,1 3,3 Source: IMF (2013) According to the IMF, the global oil price is projected to drop to $ in 2013, from $105.0 registered in 2012 and then recede to $97.58 in The world trade of goods and services is also expected to increase modestly from 2,5% in 2012 to 3,6% in 2013 and further accelerate to 5,3% in The consumer price inflation for both advanced and emerging economies is also expected to increase from 1,7% and 5,9% in 2013 to 2,0% and 5,6% in 2014, respectively. 1

12 The world manufacturing output growth rate during the first quarter of 2013 is presented in Table 2.2. Compared to the same period of previous year (year-on-year), world manufacturing output increased by 1,7% despite the manufacturing output shrinking by 1% in the industrialised economies. Therefore, the growth of the world manufacturing output was prompted by the 6,8% growth of developing and emerging industrial economies, which is largely directed by China s 9,7% growth rate. Africa s manufactured output, however, subsided by 1,8% in the first quarter of Overall quarterto-quarter growth for the manufacturing output in all regions was positive except for Africa and Latin America, which showed an 0,7% and 0,8% contraction. During the first quarter of 2013, South African manufacturing output contracted compared to the world average both year-on-year and compared to the previous quarter. TABLE 2.2: Seasonally adjusted estimated growth rates of world manufacturing output, 2013 Q1 Share in the world manufacturing value added (2010) Growth rate compared to the previous quarter Growth rate compared to the same period of previous year World Industrialised economies North America Europe East Asia Developing and emerging industrial economies (by development group) China Emerging industrial economies Least developed countries Other developing countries Developing and emerging industrial economies (by region) Africa Asia and Pacific Latin America Others South Africa 10 67,7 22,4 24,7 17,2 32,3 15,3 13,8 0,5 2,7 32,3 1,5 1,7 21,7 5,8 -- 4,0 0,6 1,3 1,4 10,1 16,1 0,5 0,1 0,5 10,1 0,7 13,1-0,8 0,6 1,7 1,0 2,3 2,5 3,3 6,8 9,7 1,1 4,0 1,1 6,8 1,8 8,4 0,1 1,6 2,0 Source: UNIDO (2013) and Quantec (2013) TABLE 2.3: Seasonally adjusted estimated growth rates of output by manufacturing sector, (in % compared to the same period of the previous year) Developing and emerging industrialised economies Industrialised economies South Africa World Food and beverages Textiles Wearing apparel, fur Leather, leather products Footwear Wood products Paper and paper products Furniture and other manufacturing 7,3 7,4 8,9 6,5 8,1 4,9 5,8 0,2 2,9 3,5 1,9 1,5 2,1 1,1 2,2 6,8 6,0 0,6 3,8 4,0 3,4 6,0 2,9 4,5 5,1 3,7 3,5 0,2 1,7 Source: UNIDO (2013) and Quantec (2013) Table 2.3 shows seasonally estimated year-on-year growth rates of world agro-processing industries for the. South Africa s wearing apparel grew above the world average during the period. Compared to the industrialised economies and developing and emerging industrialised economies, however, there was a notable underperformance of South Africa s remaining agro-processing industry during the first quarter of TABLE 2.4: Seasonally adjusted estimated growth rates of output by manufacturing sector, (in % compared to 2012: Q4) Developing and emerging industrialised economies Industrialised economies South Africa World Food and beverages Textiles 8,9 15,6 0,9 1,2 0,2 3,7 10,7 2

13 TABLE 2.4: Seasonally adjusted estimated growth rates of output by manufacturing sector, (in % compared to 2012: Q4) (Cont.) Developing and emerging industrialised economies Industrialised economies South Africa World Wearing apparel, fur Leather, leather products Footwear Wood products Paper and paper products Furniture and other manufacturing 16,1 11,9 20,6 11,9 8,5 1,4 0,6 2,4 0,2 3,3 2,0 0,7 8,6 4,6 3,2 6,8 10,6 8,1 7,7 3,9 5,9 Source: UNIDO (2013) and Quantec (2013) Table 2.4 shows the quarter-to-quarter seasonally adjusted growth rates of agro-processing industries in the world during the first quarter of During the period, the growth of South Africa s agro-processing subsector was lower compared to the world. Compared to the industrialised economies, South Africa did well in terms of food and beverages, textiles and wearing apparel. Developing and emerging industrialised economies, however, surpassed the world average in all divisions of agro-industries. 3 State of the domestic economy The growth of South Africa s economy moderated substantially from a 2,1% growth in the previous quarter to 0,9% during the first quarter of Excluding the volatile primary sector, the economy grew by 0,2%, substantially lower than the 2,8% growth it registered in the previous quarter (see Table 3.1). The primary sector grew substantially as the contraction in the agricultural sector was offset by the mining sector s growth, which increased by 14,6% as a result of the increased production of gold and platinum during the first quarter of The agricultural sector contracted by 4,9% in from the 2,3% growth it registered in the previous quarter owing to a decrease in field crop production. TABLE 3.1: South African economic growth rate (percentage change at seasonally adjusted annualised rates) Sector Q1 Q2 Q3 Q4 year Q1 Q2 Q3 Q4 year Primary sector Agriculture Mining Secondary sector Manufacturing Tertiary sector Non-primary sector 5,5 4,7 5,9 10,3 13,1 3,9 5,5 4,2 9,2 2,1 3,2 4,3 4,1 2,3 14,2 5,8 17,4 0,5 0,3 4,5 3,2 2,1 3,7 1,4 3,6 4,5 3,5 3,5 0,2 0,1 0,3 2,9 3,6 3,8 3,6 9,5 4,8 15,1 5,5 6,4 3,1 3,7 24,0 9,3 30,9 0,5 0,8 2,3 1,6 7,1 7,4 12,7 1,5 1,2 1,9 1,8 3,7 1 9,3 3,6 5,0 2,4 2,7 2,2 2,3 4,0 2,1 2,4 3,0 2,8 8,1 4,9 14,6 6,2 7,9 2,4 0,2 Total 4,8 1,9 1,9 3,3 3,5 2,5 3,4 1,2 2,4 2,5 0,9 Source: Reserve Bank (2013) The manufacturing sector, however, declined by 7,9% during the first quarter of 2013 after showing a significant growth of 2,4% in the previous quarter. Production contracted in the sectors producing wood and wood products; petroleum and chemicals; glass and non-metallic mineral products; basic iron and steel, non-ferrous metal products and machinery; radio, television and communication apparatus and professional equipment; and furniture and other manufacturing products. Among the reasons for the shrinking in production of the manufacturing sector during the quarter are weak domestic demand, low business confidence and disrupting industrial action. The electricity, gas and water sector decreased by 3,0% during the first quarter of 2013 following a 2,2% decline in the previous quarter. The construction sector s real output, however, increased marginally by 0,9% during the period mainly because of the growth in the residential and non-residential building sectors. The economic growth in the tertiary sector remained the same compared to the previous quarter s growth of 2,4% during the first quarter of While the growth of the trade sector increased by 1,9% during the period, the transport, storage and communication and the finance, insurance, real estate and business service sectors output increased from 1,9% and 2,9% in the preceding quarter to 3

14 2,2% and 3,3%, respectively. Growth in the real value added by general government, however, moderated from 2,6% in the previous quarter to 1,9% in the first quarter of 2013 because of a slower growth in employment during the period. Having contracted by 0,9% in the preceding quarter, the real gross domestic expenditure increased by 3,5% during the first quarter of The expansion is mainly the result of an increase in the real final consumption expenditure by gene ral government (from 0,7% to 3,0%) and inventories (from 4,1% to 3,3%). The growth in the real final consumption expenditure by households also slowed marginally from 2,4% to 2,3% in the period as a result of slower growth in disposable income and higher inflation. The unemployment rate increased margin ally from the previous quarter by 0,3 percentage points and reached 25,2% during the first quarter of During the period, however, employment increased by The sectors that generated employment were agriculture (54 000), community and social services (44 000), man u facturing (23000) and mining (8 000). Job losses were observed in trade (66 000), construction (41 000), finance and other business services (23 000) sectors. Source: Statistics SA (2013a) Source: Statistics SA (2013b, 2013c) The total producer price inflation for final manufactured goods increased by 5,6% and consumer price inflation increased slightly from 5,7% during the previous quarter to 5,8% during the first quarter of The consumer price of food products moderated from 6,9% to 5,8% main ly because of the moderation in the price of meat (from 6,3% to 3,6%) and bread and cereal prices (from 7,3% to 5,0%). The consumer price of processed food products also moderated marginally from 7,1% to 6,5% and for unprocessed food products it moderated from 6,7% to 5,4%. TABLE 3.2: Exchange rates of the rand (percentage change) Currency 31 Dec to 31 Mar Mar to 30 Jun Jun to 31 Sep Sep to 31 Dec Dec to 31 Mar Mar to 31 May 2013 Weighted average 1 Euro US dollar Chinese yuan British pound Japanese yen 4,4 2,5 5,9 5,9 2,0 12,0 4,8 1,9 7,5 6,7 5,3 10,5 1,3 1,9 1,0 0,1 2,7 1,4 2,8 5,0 3,1 3,9 2,7 7,6 5,7 5,5 8,3 8,5 2,3 0,3 9,0 10,9 9,3 10,4 9,5 3,3 4 Source: Reserve Bank (2013) Table 3.2 shows the exchange rates of the rand, during the first quarter of The nominal effective exchange rate of the rand dropped by 5,7% following a decline of 2,8% in the previous quarter as a result of lower international prices of the main export commodities, ongoing economic issues in the Euro zone and tensions in the domestic labour market (Reserve Bank, 2013). The sizable depreciation of the rand was against the Chinese yuan and US dollar. The real effective exchange rate of the rand also declined during the period; as a result, the external price competitiveness of domestic exporters improved during this period.

15 4 The agro-processing industry The 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 originating from agriculture, forestry and fisheries. According to the Standard Industrial Classification, the agro-processing industry comprises the following 11 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 2013 given the global and domestic economic situation during the period. 4.1 FOOD PRODUCTS The table below depicts the producer price index for domestic output of processed foods. It shows that the aggregate producer price of food products moderated from 10,3% year-on-year in the previous quarter to 6,1% during the first quarter of 2013 (see Table 4.1). This can be attributed to the moderation of producer prices of other food products from 16,0% to 5,4%, prepared and preserved fish from 9,0% to 4,9% and grain mill products from 8,7% to 4,7%. However, the producer price increased year-on-year for fruit and vegetables from 6,7% to 18,0% and for meat and meat products from 4,5% to 5,1%. Among the food categories, the producer price of fats and oils, grain mill products and bakery products and meat and meat products showed a quarter-to-quarter decrease rate of 1,6%, 2.1%, 1,3%, respectively. Similarly, the producer price for other food products and prepared and preserved fish decreased by 1,1% and 2,3%, respectively. As a result, the quarter-to-quarter producer price inflation of processed food s domestic output increased marginally by 0,4%. TABLE 4.1: Producer price index for domestic output of South African processed food products (Base 2012=100) Food product Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Food (total) Coffee and tea Dairy products Fats and oils Fruit and vegetable products Grain mill products and bakery products Meat and meat products Other food products Prepared and preserved fish Sugar 97,7 95,0 91,3 96,9 98,8 98,8 98,3 98,8 99,9 103,2 101,9 109,6 101,6 104,9 106,1 102,4 101, ,7 104,1 107,8 101,4 103,5 103,9 103,6 103,7 100,2 6,1 9,5 18,0 4,6 4,7 5,1 5,3 4,9 0,3 0,4 2,2 1,6 0,2 1,3 2,1 1,1 2,3 0,2 Source: Statistics SA (2013c) The year-on-year producer price for exported food products moderated from a contraction of 2,7% to 2,2% during 2013: Q1. This was mainly driven by a decrease in sugar prices by 8,4% and the moderation of exported fruit and vegetables prices from 20,6% in the previous quarter to 15,9% during the first quarter of The producer price index for exported grain mill products also decreased by 3,6% from a 5,2% growth in the previous quarter. The quarter-to-quarter price of aggregate food products declined by 1,1%, mainly prompted by the decrease in grain mill products and sugar by 4,3% and 1,9%, respectively (see Table 4.2). TABLE 4.2: Producer price index for exported commodities of South African processed food Food product Food (total) Dairy products Fats and oils Fruit and vegetable products Grain mill products and bakery products Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 155,2 143,1 199,4 132,3 240,1 153,5 143,1 199,4 152,8 241,8 151,8 143,1 199,4 153,4 231,4 2,2 15,9 3,6 2012: Q4 and 1,1 0,4 1,9 1 The Reserve Bank calculates the nominal effective exchange rate of the rand based on trade in and consumption of manufactured goods between South Africa and its most important trading partners. It is calculated against 15 currencies. The weights of the five major currencies are in brackets: Euro (0,34), US dollar (0,14), Chinese yuan (0,12), British pound (0,10), Japanese yen (0,10). 5

16 TABLE 4.2: Producer price index for exported commodities of South African processed food (Cont.) Food product Meat and meat products Other food products Prepared and preserved fish Sugar Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 121,0 175,3 156,5 145,2 120,4 177,2 157,0 135,5 120,4 177,7 157,6 133,0 0,5 1,4 0,7 8,4 2012: Q4 and 4,3 0,3 0,4 Source: Statistics SA (2013c) TABLE 4.3: Producer price index for imported commodities of South African processed food (Base 2000=100) Food product Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Food (total) Coffee and tea Dairy products Fats and oils Fruit and vegetable products Grain mill products and bakery products Meat and meat products Other food products Prepared and preserved fish Sugar 181,3 139,7 180,7 219,2 156,0 161,2 218,5 134,5 121,1 174,5 181,5 139,7 181,9 223,5 156,0 170,7 201,6 133,7 121,1 174,5 183,0 139,7 183,3 223,2 156,0 172,2 207,9 134,0 121,0 174,5 0,9 1,4 1,9 6,8 4,9 0,4 0,8 0,8 0,1 0,9 3,1 0,2 0,1 Source: Statistics SA (2013d) The year-on-year volume of production of meat, fish, fruit, etc. and dairy products decreased by 3%. Production, however, increased, for grain mill products by 4,8% and it remained unchanged for other food products (see Figure 4.1). However, the quarter-to-quarter volume of production of meat, fish, fruit, etc. and grain mill products decreased by 1,9% and 1%, respectively, whereas for the other food pro d ucts it increased substantially by 9,4%. Production volume for grain mill and dairy products decreased marginally during. Source: Statistics SA (2013d) TABLE 4.4: Utilisation and reasons for underutilisation of production capacity by large enterprises: food products (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 77,6 84,8 8 22,4 15,2 19,2 2,5 3,3 2,6 1,7 1,1 1,4 0,2 0,2 0,1 11,0 8,5 11,3 7,1 2,0 3,8 Source: Statistics SA (2013e) 2 Large enterprises included in the survey are those with a turnover greater than R100 million per annum 6

17 The utilisation and reason for underutilsation of production capacity by large enterprises of food products showed a moderate increase year-on-year and it declined quarter-to-quarter during the first quarter of (see Table 4.4). The yearon-year increase in the utilisation capacity is not consistent with the contraction in production volumes in the food division. Among the reasons for underutilisation, insufficient demand is the main one, followed by others (such as lower prodcutivity and seasonal factors), shortage of raw materials and skilled labour. The year-on-year growth rate of the value of sales for meat, fish, fruit, etc., dairy products, grain mill products and other food products decreased by 6,4%, 5,9%, 9,8% and 1,7% respectively. Similarly the quarter-to-quarter value of sales of dairy products and grain mill products increased moderately by 3,3% and 0,7% respectively. However, the value of sales for meat, fish, fruit, etc., and other food products decreased moderately by 1,4% and 2,6%, respectively, during the first quarter of 2013 (see Figure 4.2). Source: Statistics SA (2013d) Figure 4.3 shows the quarterly trade balance of processed food products. The import and export of food products increased by 2,8% and 20,6% year-on-year respectively during the first quarter of However, compared to the previous quarter, exports and imports of food products decreased by 16,3% and 24,4% respectively. Hence, the trade deficit declined from R6 031,9 million in the previous quarter to R4 089,8 million in the first quarter of Source: Quantec EasyData (2013) Source: Statistics SA (2013f) Figure 4.4 shows that the number of formal employment opportunities in the food division contracted by 1,8% year-on-year and it declined by 0,2% quarter-to-quarter. This was mainly as a result of a year-on-year drop in employment in the production, processing and preservation of meat fish, etc., and dairy products category by 3,0%. Com pared to the previous quarter, the other food products category shed 0,5% of the jobs followed by dairy products (-0,7%). Employment in the production, processing and preservation of meat, however, increased by 0,5%. As a result the total formal employment decreased to during the first quarter of 2013 from in the previous quarter. TABLE 4.5: Net balance of BER manufacturing survey: food products 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes

18 TABLE 4.5: Net balance of BER manufacturing survey: food products (Cont.) 2012: Q3 2012: Q4 2013: Q2* Domestic order volumes received Export order volumes received General business condition Number of factory workers Fixed investment Business confidence Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business condition in 12 months time *Expected Source: BER (2013) A survey of food manufacturing by the Bureau for Economic Research (BER) is presented in Table 4.5. The survey shows that domestic sales and production volumes were expected to grow year-on-year during the. However, a contraction of export sales was expected. The actual data during the period supported the expectation. The outlook for the second quarter of 2013 for domestic sales, exports and production volumes is positive but it remains bleak for general business confidence and employment BEVERAGES The year-on-year producer price of beverages for domestic output moderated from 6,0% in the preceding quarter to 3,7% during the first quarter of However, the quarter-to-quarter prices of beverages increased from 1,2% to 1,7%. The producer prices of exported beverages commodities increased moderately from 1,8% year-on-year to 3,2% in 2013: Q1 mainly driven by increases in the alcoholic beverages from 2,2% to 3,8%. The producer price of imported beverages, however, remains unchanged. (see Table 4.6). TABLE 4.6: Producer price index for beverages (Base 2000=100) Indices % change Beverages (total) Alcoholic beverages Non alcoholic beverages Beverages (total) Alcoholic beverages Non alcoholic beverages 2012: Q1 2012: Q4 2012: Q1 and Domestic output (2012=100) 99,9 102,4 103,6 3,7 1,8 121,8 121,2 121,0 123,6 123,4 121,0 Exported commodities 125,7 125,8 121,0 3,2 3,8 2012: Q4 and 1,7 1,9 Imported commodities Beverages (total) Alcoholic beverages Non alcoholic beverages 157,8 163,2 109,6 157,8 163,8 109,6 157,8 163,2 109,6 0,3 Source: Statistics SA (2013c) 3 BER calculates the net balance statistic by subtracting the % of the respondents replying down from the % replying up to a particular question. Respondents are asked to compare the current quarter s experience with 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. 4 BER calculates the business confidence index by asking respondents to rate current business conditions as satisfactory or unsatisfactory. Then the index is derived as a gross percentage of the respondents replying satisfactory. A value of 50 is indicative of neutrality, 100 indicative of extreme confidence and 0 of extreme lack of confidence. An index greater than 50 shows the majority of respondents are satisfied with the prevailing economic conditions. 8

19 Figure 4.5 presents the seasonally adjusted physical volume of production for beverages. During. The year-on-year volume of production of beverages increased by 2,0% following a 3,4% growth in the preceding quarter. After showing a 0,7% quarter-toquarter growth in 2012: Q4, the volume of production decreased marginally by 1% during. Source: Statistics SA (2013d) TABLE 4.7: Utilisation and reasons for underutilisation of production capacity by large enterprises: beverages division (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 81,9 18,1 2,1 1,0 0,3 10,5 4,2 2012: Q4 83,5 16,5 2,5 1,1 0,3 8,0 4,7 82,0 18,0 2,4 1,9 0,3 9,3 4,1 Source: Statistics SA (2013e) The utilisation of production capacity by large enterprises in the beverages division increased marginally year-on-year and decreased slightly compared to the previous quarter (see Table 4.7). The data are consistent with the year-on-year increase in the physical volume of production of beverages during the period. The quarter-to-quarter increase in the utilisation capacity, however, is not reflected by the increase in the production volume. Among the reasons for underutilisation, insufficient demand remained the main reason, followed by other reasons (such as seasonal factors and lower productivity) and shortage of skilled labour. The seasonally adjusted value of sales of beverages is presented in Figure 4.6. Following the year-on-year increase in the volumes of production and producer price, the value of sales of beverages increased by 11,2% year-on-year during the first quarter of Com pared to the previous quarter, value of sales of beverages increased by 1,7% mainly owing to the increase in producer price. Source: Statistics SA (2013e) 9

20 Source: Quantec EasyData (2013) The beverages export increased significantly by 22,0% year-on-year during the first quarter of 2013 following a 5,5% growth it registered in the preceding quarter. However, imports moderated to 13,0% year-on-year during following a substantial increase of 16,7% in the previous quarter (see Figure 4.7). Compared to the previous quarter, import and export of beverages contracted by 18,3% and 10,7%, respectively, during the first quarter of As a result, the trade balance of beverages decreased from a surplus of R1 359,6 million in the previous quarter to a surplus of R1 307,6 million in the first quarter of Following a year-on-year increase in the volume of production and exports, during, Figure 4.8 shows that the formal employment in the beverage and tobacco products division expanded by 3,0% year-on-year and it increased by 6,6% compared to the previous quarter. Therefore, the total formal employment opportunities in the division increased from in the previous quarter to during. Source: Statistics SA (2013f) TABLE 4.8: Net balance of BER manufacturing survey: beverages 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes Domestic order volumes received Export order volumes received General business conditions Number of factory workers Fixed investment Business confidence Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business condition in 12 months time *Expected Source: BER (2013) The year-on-year growth of domestic sales, export sales as well as production volumes were expected during the as depicted by the manufacturing survey of beverages BER (see Table 4.8). However, employment was anticipated to show little change. The actual data are consistent with the sales, volume and exports expectation. The year-on-year outlook for the second quarter of 2013 is positive for all variables, except for the general business conditions. 10

21 4.3 TOBACCO During, the year-on-year producer price of tobacco products for domestic output was 3,9%. The year-on-year producer price for both imported and exported tobacco products remained unchanged. Compared to the previous quarter, the producer price for imported and exported tobacco products showed no change, while for domestic output, it increased by 1,2% (see Table 4.9). TABLE 4.9: Producer price index for tobacco products (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and Domestic output 2012: Q4 and 98,5 101,1 102,3 3,9 1,2 Exported commodities 180,8 183,3 183,3 1,4 Imported commodities 122,5 122,5 122,5 Source: Statistics SA (2013c) Source: Quantec Easydata (2013) Export of tobacco products accelerated by 6,6% year-on-year from 3,5%, while import of tobacco products moderated significantly from an 88,8% growth it registered in 2012: Q4 to 49% (see Figure 4.9). Compared to the previous quarter, export of tobacco products increased substantially by 10,9% after showing a 6,3% quarter-toquarter decline in the previous quar ter. How ever, compared to the previous quarter, import of tobacco products de clined considerably from a 35,7% growth to a 7,5% contraction. Because of the increase in export, the trade surplus increased from R190,7 million in the previous quarter to R242,0 million in. 4.4 TEXTILES The year-on-year producer price of textiles for domestic output was 4,1% during the first quarter of 2013 (see Table 4.10). During, the PPI of exported and imported textiles and made-up goods, increased by 3,8 %, 1,6% year-on-year, respectively. The PPI of exported textile articles other than apparel also increased by 3,8% year-on-year from a 2,3% growth recorded in the previous quarter. The producer price of exported yarn and thread, woven and tufted textile fabric showed the highest year-on-year growth compared to the other textile products. However, its growth moderated to 10,7% from 13,8% in the previous quarter. The PPI of imported and exported textile articles other than apparel and yarn and thread, woven and tufted textile fabric increased by 1,5% and 0,2% year-on-year. Compared to the previous quarter, the PPI of textiles for domestic output deceased by 1,3%. The PPI of exported textiles and made-up goods and textile articles other than apparel, increased by 0,8% and 1,1% respectively, while yarn and thread, woven and tufted textile fabric, further decreased by 1,5%. The PPI of imported yarn and thread, woven and tufted textile fabric showed no change. However, imported textiles and made-up goods and textile articles other than apparel increased by 0,2% and 0,7%, respectively. TABLE 4.10: Producer price index for textiles (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Domestic output (2012=100) Textiles 99,3 102,0 103,4 4,1 1,3 11

22 TABLE 4.10: Producer price index for textiles (Base 2000=100) (Cont.) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Exported commodities Textiles and made-up goods Textile articles other than apparel Yarn and thread, woven and tufted textile fabric (prepared for spinning) 190,2 124,4 306,4 195,8 126,8 344,5 197,4 128,2 339,2 3,8 3,1 10,7 0,8 1,1 1,5 Imported commodities Textiles and made-up goods Textile articles other than apparel Yarn and thread, woven and tufted textile fabric (prepared for spinning) 121,4 139,1 112,4 121,9 140,2 112,4 122,2 141,2 112,4 1,6 1,5 0,2 0,2 0,7 Source: Statistics SA (2013a) The physical volume of production for textiles declined by 3,7% year-on-year in 2013: Q1 after shrinking by 5,9% during 2012: Q4 (see Figure 4.10). The volume of production for other textiles further decreased by 8,2% year-on-year from a 5,6% decline in the previous quarter. Compared to the previous quarter, the production volume of textiles increased by 1,0%, while for other textiles it decreased by 0,5%. Source: Statistics SA (2013d) TABLE 4.11: Utilisation and reasons for underutilisation of production capacity by large enterprises: textiles (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 71,8 72,7 71,2 28,2 27,3 28,8 1,0 1,1 1,7 0,7 1,0 0,6 0,3 0,4 0,5 24,5 22,9 24,1 1,8 2,0 1,9 Source: Statistics SA (2013e) Table 4.11 indicates that in the textile division, the utilisation of production capacity by big enterprises declined marginally year-on-year and decreased moderately compared to the previous quarter during. Other reasons (such as downtime because of maintenance, seasonal factors and lower productivity) and shortage of raw materials are cited as reasons for underutilisation. However, the main reason for underutilisation in the textiles division continued to be insufficient demand. 12

23 Source: Statistics SA (2013d) The seasonally adjusted value of sales of other textile products contracted by 2,3%, following a 6,0% year-on-year decline in the previous quarter (see Figure 4.11). The year-on-year value of sales of textiles increased by 1,2% in following a 3,6% growth it registered in 2012: Q4. Compared to the previous quarter, the value of sales for other textiles increased by 3,7%, while it contracted by 1,3% for textiles. The reduction in the quarter-toquarter value of sales for textiles is mainly the result of the decline in the volume of production. The year-on-year aggregated textile sales (textiles and other textiles) contracted by 1,2% during following a 3,0% decline during 2012: Q4. It, however, increased by 2,1% compared to the previous quarter. The year-on-year export of textiles accelerated substantially by 17,4% from a 1,6% growth it registered in the previous quarter. Import of textiles also increased by 5,3% year-on-year following a 0,3% contraction in the previous quarter. Compared to the previous quarter, export and import of textiles contracted by 1,9% and 6,7% respectively. The increase in export of textiles, however, had little impact on the trade deficit as it increased slightly from R1 641,9 million in the previous quarter to R1 644,2 million in the first quarter of Source: Quantec EasyData (2013) Source: Statistics SA (2013f) During the first quarter of 2013, formal employment contracted by 3,8% year-onyear and by 2,5% compared to the previous quarter, following a year-on-year marginal decline in the volume of production (see Figure 4.13). The year-on-year formal employment in the preparation and spinning of textile fibres contracted by 2,3%, while it increased by 0,7% compared with the previous quarter. In the other textiles category, formal employment further declined by 4,3% year-onyear and by 3,5% compared to the previous quarter. As a result, the total formal employment in the textile division decreased from in the previous quarter to during the first quarter of TABLE 4.12: Net balance of the BER manufacturing survey: textiles 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes Domestic order volumes received

24 TABLE 4.12: Net balance of the BER manufacturing survey: textiles (Cont.) 2012: Q3 2012: Q4 2013: Q2* Export order volumes received General business conditions Number of factory workers Fixed investment Business confidence Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business condition in 12 months time *Expected Source: BER (2013) The manufacturing survey of textiles conducted by the BER indicated that domestic production, sales and employment were expected to decrease and export was expected to increase year-on-year during the first quarter of The actual data confirm this, except for exports and employment that showed a year-on-year decrease. The year-on-year outlook for the second quarter 2013 is bleak for all of the variables. 4.5 WEARING APPAREL The year-on-year producer price of wearing apparel for domestic output was 2,3% during. The producer price for exported wearing apparel decreased by 0,5% year-on-year from a 1,8% increase in the previous quarter. The PPI for exported other wearing apparel also decreased by 1,7% following a 5,8% increase in the previous quarter, while the PPI for exported knitted or crocheted fabrics, however, remained relatively unchanged during (see Table 4.13). Compared to the previous quarter, the PPI of exported wearing apparel and other wearing apparel increased by 0,3% and 0,8% respectively, while for knitted or crocheted fabrics it remained unchanged. The PPI for imported wearing apparel, knitted or crocheted fabrics and other wearing apparel also increased by 0,6%, 0,7% and 0,6%, respectively, compared to the previous quarter. TABLE 4.13: Producer price index for wearing apparel (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Domestic output Textiles 99,4 100,6 101,6 2,3 1,0 Exported commodities Wearing apparel Knitted or crocheted fabrics Other wearing apparel 115,4 118,3 129,6 115,7 118,3 130,7 116,0 118,3 131,7 0,5 1,7 0,3 0,8 Imported commodities Wearing apparel Knitted or crocheted fabrics Other wearing apparel 124,7 124,4 124,7 124,9 124,5 124,8 125,7 125,4 125,6 0,8 0,8 0,7 0,6 0,7 0,6 Source: Statistics SA (2013c) 14

25 Source: Statistics SA (2013d) During, the year-on-year seasonally adjusted volume of production of knitted or crocheted articles further declined by a significant 20,2% following a 10,6% contraction it registered in the previous quarter (see Figure 4.14). On the other hand, the volume of production of wearing apparel accelerated by 9,0% from a 4,0% growth it recorded in 2012: Q4. Compared to the previous quarter, the volume of production for knitted or crocheted articles decreased by 8,0%, while for wearing apparel it increased by 2,6% during the first quarter of TABLE 4.14: Utilisation and reasons for underutilisation of production capacity by large enterprises: wearing apparel (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 77,6 86,1 80,9 19,0 19,2 13,9 1,1 0,6 1,3 1,1 0,4 0,4 1,3 0,8 0,8 13,7 7,8 13,1 5,2 4,4 3,6 Source: Statistics SA (2013e) During the first quarter of 2013, utilisation of production capacity in the wearing apparel division increased by 3,3 percentage points year-on-year and showed a quarter-to-quarter decline of 5,2 percentage points compared to the previous quarter. Table 4.14 indicates that insufficient demand remained the key reason behind low capacity utilisation, followed by lower productivity, seasonal factors and downtime owing to maintenance. The seasonally adjusted value of sales of knitted or crocheted articles further contracted significantly by 19,0% year-onyear during the first quarter of 2013, following a 8,7% decline in the previous quarter. The year-on-year value of sales of wearing apparel increased by 10,9% from a growth of 9,7% during 2012: Q4 (see Figure 4.15). The quarter-on-quarter value of sales of wearing apparel decreased by 0,9%, while the value of sales of knitted or crocheted articles contracted by 8,2% during. The decrease in the value of sales of knitted or crocheted art i- Source: Statistics SA (2013d) cles is mainly the result of the decrease in production volume. During, the total year-on-year value of sales of wearing apparel (wearing apparel and knitted or crocheted articles) increased by 7,2%, following a 7,4% growth it registered in the previous quarter. It, however, showed little change compared to the previous quarter. 15

26 Source: Quantec EasyData (2013) Source: Statistics SA (2013f) Figure 4.16 indicates that South Africa has continued to be a net importer of wearing apparel just as in the case of the textile products. During, the year-onyear export increased substantially by 41,0% from a 7,0% growth it registered in the previous quarter. Import, on the other hand, moderated marginally to 17,3% from a 17,9% growth it showed in the preceding quarter. Compared to the previous quarter, export of wearing apparel contracted by 4,1%, while import increased by 13,3%. As a result, the trade deficit of wearing apparel widened from R3 540,8 million in the previous quarter to R4 061,0 million during. Following a slight year-on-year decrease in the production volume during the first quarter of 2013, the formal employment in the wearing apparel division contracted significantly by 10,2% year-on-year and marginally by 0,1% compared to the previous quarter (see Figure 4.17). In the knitted and crocheted fabrics and articles category, formal employment contracted by 0,7% year-on-year. However, compared to the previous quarter, it increased by 2,8%. The year-on-year formal employment in the wearing apparel, except the fur category, further declined by 11,1% and it decreased by 0,5% compared to the pre vious quarter. The number of formal employ ment opportunities in the wearing division decreased slightly from during 2012: Q4 to during. TABLE 4.15: Net balance of the BER manufacturing survey: clothing 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes Domestic order volumes received Export order volumes received General business conditions Number of factory workers Fixed investment Business confidence Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business condition in 12 months time *Expected Source: BER (2013) The manufacturing survey of wearing apparel by BER shows that a year-on-year increase in domestic production and sales was anticipated, while export and employment were expected to decrease. The actual data are consistent with the expectation, except for export that showed growth. During, the business confidence in the division shows that the majority of the manufacturers were satisfied with the business situation during the period. The outlook for the division for the second quarter of 2013 reveals that all variables are expected to show a positive year-on-year growth. 16

27 4.6 LEATHER AND LEATHER PRODUCTS Table 4.16 shows that during the first quarter of 2013 the producer price of leather and leather products for domestic output increased by 20,8% year-on-year. The producer price of imported leather products also increased by 9,8% yearon-year; however, it remained unchanged for leather export products. Compared to the previous quarter, the producer price of leather and leather products for domestic output increased by 1,2% and it remained unchanged for both exported and imported leather products. TABLE 4.16: Producer price index for leather and leather products (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and Domestic output 2012: Q4 and 91,0 108,6 109,9 20,8 1,2 Exported commodities 98,3 98,3 98,3 Imported commodities 142,1 146,5 3,8 9,8 Source: Statistics SA (2013c) During, The volume of production for leather and leather products moderated to 0,7% year-on-year after showing a 3,0% year-on-year growth in the previous quarter (see Figure 4.18). The quarterto-quarter volume of production also moderated by 0,2% after showing a 3,5% quarter-to-quarter increase in the previous quarter. Source: Statistics SA (2013d) TABLE 4.17: Utilisation and reasons for underutilisation of production capacity by large enterprises: leather and leather products (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2011: Q4 2012: Q4 72,0 69,6 63,6 28,0 30,4 36,4 3,1 3,4 3,4 0,9 0,8 0,8 0,8 0,5 0,6 21,6 23,3 26,7 1,8 2,4 4,1 (Source: Statistics SA (2013e) The utilisation of production capacity by large enterprises of leather and leather products declined by 6,4 percentage points year-on-year while there was quarter-to-quarter increase of 6,0 percentage points in. The key reason behind low capacity utilisation was insufficient demand of leather products which increased by 3,4 percentage points, followed by shortage of raw materials and other reasons such as seasonal factors (see Table 4.17). While the percentage points of shortage of raw materials, as a reason for underutilisation, remained the same compared to the previous quarter, it increased by 1,6 percentage points for other reasons during the period. 17

28 During. The seasonally adjusted value of sales of leather and leather products moderated considerably from 13,6% yearon-year in the previous quarter to 2,2% during the first quarter of The value of sales also showed a quarter-to-quarter contraction of 7,6%, after showing a 10,7% quarter-toquarter growth in the previous quarter (see Figure 4.19). The decrease in the volume of production was the main cause for the decline in the quarter-to-quarter value of sales. Source: Statistics SA (2013d) Export of leather and leather products accelerated by 37,7% year-on-year after showing a 15,5% increase in the previous quarter. Following an increase of 8,0% year-on-year in the previous quarter, import growth also accelerated by 26,0% in. Compared to the previous quarter, export of leather products increased by 9,1% while import decreased by 15,9%. As a result, the trade deficit decreased from R523,7 million in the previous quarter to R372,3 million during the first quarter of 2013 (see Figure 4.20). Source: Quantec EasyData (2013) Formal employment in the leather and leather products division decreased by 11,3% year-on-year and it contracted by 2,1% compared to the previous quarter, despite a marginal quarter-to-quarter and year-onyear increase in the volume of production. As a result, the total formal employment decreased from in the previous quarter to in (see Figure 4.21). Source: Statistics SA (2013f) 4.7 FOOTWEAR The producer price of footwear for domestic output increased by 5,1% year-on-year during the first quarter of The year-on-year producer price of exported footwear remained unchanged while for imported footwear, it increased by 1,7%. Compared to the previous quarter, the producer price for domestic output increased by 5,6%. The PPI for imported and exported footwear commodities, however, showed little change (see Table 4.18). TABLE 4.18: Producer price index for footwear (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and Domestic output 99,3 98,3 104,3 5,1 5,6 2012: Q4 and 18

29 TABLE 4.18: Producer price index for footwear (Base 2000=100) (Cont.) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and Exported commodities 2012: Q4 and 166,7 166,7 166,7 Imported commodities 128,8 131,1 131,1 1,7 0,1 Source: Statistics SA (2013c) The physical volume of production of footwear further declined by 3,3% year-on-year after showing a 5,0% contraction in the previous quarter (Figure 4.18). Follow ing a 4,8% quarter-to-quarter contraction in the preceding quarter, the volume of production rebounded by 8,3% compared to the previous quarter during. TABLE 4.19: Utilisation and reasons for underutilisation of production capacity by large enterprises: footwear (percentage) Reasons for underutilisation Source: Statistics SA (2013d) Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 90,4 89,4 87,4 9,6 10,6 12,6 0,9 0,9 2,1 0,5 0,5 1,2 8,2 9,2 9,3 Source: Statistics SA (2013e) The utilisation of production capacity by large footwear enterprises decreased by 3,0 percentage points year-on-year while there was a 2,0 percentage points increase in compared to the previous quarter. Insufficient demand remained the key reason behind low capacity utilisation of the footwear division, followed by shortages of raw materials and skilled labour (see Table 4.19). The shortage of raw materials, as a reason for underutilisation, increased by 1,2 percentage points compared to the previous quarter while for shortage of raw materials it increased by 0,7 percentage points. The year-on-year seasonally adjusted value of sales of footwear increased by 5,5% after showing an 8,0% growth in the previous quarter. Prompted mostly by the rebound in the volume production, the value of sales also showed a quarter-to-quarter growth of 4,6% during the first quarter of 2013, (see Figure 4.23). Source: Statistics SA (2013d) 19

30 During, footwear export moderated by 8,1% year-on-year after showing a significant 30,6% increase in the previous quarter. Import, however, accelerated by 13,8% year-on-year from a 6,3% growth it showed during the previous quarter. Compared to the previous quarter, export of footwear contracted significantly by 27,4%, while import of footwear substantially expanded by 11,2%. As a result, the trade deficit widened from R1 926,6 million in the previous quarter to R2 174,8 million in the first quarter of 2013 (see Figure 4.24). Source: Quantec EasyData (2013) Following a year-on-year decline in the exports and production volume in the footwear division, formal employment increased by 14,8% year-on-year. During the first quarter of 2013, formal employment in the footwear division increased by 6,2% compared to the preceding quarter (see Figure 4.25). Following a quarter-to-quarter increase in the volume of production, formal employment in the footwear division increased from in the previous quarter to in the first quarter of Source: Statistics SA (2013f) 4.8 WOOD AND WOOD PRODUCTS As depicted in Table 4.20, the producer price for both domestic and exported output of wood and wood products increased year-onyear by 3,2% and 2,0%, respectively. The producer price for imported wood and wood products, however, showed a moderate growth of 1,5% year-on-year. Following no change in the previous quarter, the producer price for domestic output grew marginally by 0,3% while no change was observed for the producer price of exported wood and wood products. Compared to the previous quarter, the producer price for imported wood and wood products grew marginally by 0.1%. TABLE 4.20: Producer price index for wood and wood products (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Domestic output (2012=100) 98,5 101,4 101,7 3,2 0,3 Exported commodities 178,9 182,5 182,5 2,0 Imported commodities 144,5 146,5 146,6 1,5 0,1 Source: Statistics SA (2013c) 20

31 Source: Statistics SA (2013d) The seasonally adjusted physical volume of production for sawmilling and planing of wood decelerated by 6,6% year-onyear, from 0,9% growth registered in the previous quarter. For the products of wood, on the other hand, the volume of production further decelerated by 2,3% year-on-year, following a 0,6% contraction in the previous quarter. Compared to the previous quarter, the physical volume of production for both sawmilling and planing of wood and products of wood decreased by 7,1% and 3,7%, respectively (see Figure 4.26). TABLE 4.21: Utilisation and reasons for underutilisation of production capacity by large enterprises: wood and wood products (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 85,7 83,1 84,8 18,6 15,0 17,2 1,2 1,1 1,0 1,7 1,9 1,8 0,4 1 8,2 9,1 5,2 3,8 5,3 (Source: Statistics SA (2013e) From Table 4.21, the utilisation of production capacity of wood and wood products by large enterprises grew slightly yearon-year and declined moderately from the previous quarter. The decline in quarter-to-quarter utilisation of production capacity is reflected by a substantial decline in the overall volume of production in the division. Though other reasons such as downtime as a result of maintenance, lower productivity and seasonal factors contributed to underutilisation of production capacity, insufficient demand remained the main reason. Source: Statistics SA (2013d) During, the value of sales for sawmillling and planing of wood decreased by 2,4% year-on-year, following a 6,6% yearon-year decrease in production volume. On the other hand, the value of sales for the products of wood marginally increased by 0,4% year-on-year, as a results of a modest growth of 3,2% in producer price, which offset a 2,3 % decrease in production volume. Compared to the previous quarter, the value sales for both sawmilling and planing of wood and products of wood decreased by 4,5% and 4,2%, respectively, mainly becasue of a substantial decrease in production volume in the division as indicated in Figure South Africa has been a net exporter of wood and wood products until However, both exports and imports have remained equivalent since 2007 (see Figure 4.28). The value of exports for wood and wood products decreased by 24,0% year-on-year during. Imports, however, increased from 1,5% growth registered in the previous quarter to 8,1% year-on-year. Compared to the previous quarter, the value of exports decreased moderately by 6,3% during 2013: Q1 while imports showed a substantial growth of 15,7% during the same period. Because exports dropped significantly and imports rose sharply, the trade deficit increased from R189.3 million in the previous quarter to R339.1 million during. 21

32 Source: Quantec EasyData (2013) Following a year-on-year and quarter-toquarter decline in the volume of production and export, the number of formal employment opportunities in the wood and wood products division contracted by 3,3% yearon-year and by 3,5% compared to the previous quarter (see Figure 4.29). This is mainly the result of the decrease in the sawmilling and planning of wood category, which contracted significantly by 12,1% year-on-year and by 5,4% compared to the previous quarter. Formal employment in the wood products category also showed a quarter-toquarter decline of 2,0%, while it increased by 4,3% year-on-year. Therefore the total employment in the wood and wood products division declined from during the pre vious quarter to during. TABLE 4.22: Net balance of the BER manufacturing survey: wood and wood products 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes Domestic order volumes received Export order volumes received General business conditions Number of factory workers Fixed investment Business confidence Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business condition in 12 months time *Expected Source: BER (2013) As depicted by the manufacturing survey of the wood and wood products division in Table 4.22, a year-on-year growth in all variables, except for production, was anticipated during. The actual data, how ever, show that all variables declined during. Business confidence shows that the business conditions were unsatisfactory for the majority during the period. Furthermore, the outlook for 2013: Q2 is negative for all variables. Source: Statistics SA (2013f) 4.9 PAPER AND PAPER PRODUCTS The producer price for the domestic output of paper and paper products increased by 7,8% year-on-year during 2013: Q1. During the same period, the producer price for exported paper and paper products increased by 3,3% year-on-year after showing a 2,6% growth in the previous quarter. The producer price for imported paper and paper products further decelerated by 2,8% year-on-year from the 1,8% deflation it recorded in the previous quarter. Compared to the previous 22

33 quarter, the producer price for both exported and imported paper and paper products recorded a similar growth of 0,1% while the producer price for domestic output increased by 3,8% (see Table 4.23). TABLE 4.23: Producer price index for paper and paper products (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and Domestic output (2012=100) 2012: Q4 and 97,0 100,7 104,5 7,8 3,8 Exported commodities 152,7 157,6 157,7 3,3 0,1 Imported commodities 132,8 128,9 129,1 2,8 0,1 Source: Statistics SA (2013) As shown in Figure 4.30, the physical volume of production for paper and paper products declined moderately by 3,6% year-on-year, following a decline of 1,5% in the previous quarter. From the previous quarter-to-quarter growth of 2.7%, the physical volume of production decreased by 3,5% during. Source: Statistics SA (2013d) Table 4.24: Utilisation and reasons for underutilisation of production capacity by large enterprises: paper and paper products (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 84,6 88,1 84,1 15,4 11,9 15,9 0,7 0,4 0,9 1,3 1,8 1,6 0,1 0,1 0,1 7,2 4,7 7,1 6,1 4,9 6,2 Source: Statistics SA (2013e) Table 4.24 shows that the utilisation of production capacity by large enterprises declined both year-on-year and from the previous quarter during. The decline in utilisation of production capacity is mainly reflected by the decline in the volume of production in the division. The main reasons behind the underutilisation of production capacity are attributed to insufficient demand and other reasons such as seasonal factors, of which the percentage points increased during the period compared to the previous quarter. 23

34 As a result of a moderate increase in producer price, the value of sales for paper and paper products moderated to 2,3% year-on-year, following a 3,3% growth it registered in the previous quarter. Following a decline in quarter-to-quarter volume of production by 3,5%, the value of sales for paper and paper products also contracted by 0,9% during (see Figure 4.31). Source: Statistics SA (2013d) Source: Quantec EasyData (2013) Figure 4.32 shows that South Africa maintained a positive trade balance during, as exports rebounded quickly to offset the negative trade balance observed in the previous quarter. Nevertheless, imports value increased by 18,7% year-onyear during the period, after a similar growth observed in the previous quarter. Exports, however, rebounded by 3,4% year-on-year from a 16,3% decrease registered in the preceding quarter. Compared to the preceding quarter, the value of exports showed a substantial growth of 9,7%, while a 3,8% decrease was observed for imports, during. Because of a remarkable quarter-to-quarter growth in exports compared to imports, the trade balance turned out to be a surplus of R313.0 million in from a trade deficit of R22.2 million recorded in the preceding quarter. Figure 4.33 shows that the number of formal employment opportunities in the paper and paper products division declined by 3,4% year-on-year and it contracted by 2,2% compared to the previous quarter, following a year-on-year and quarter-toquarter decrease in the volume of production. As a result, the number of total employment opportunities in the division decreased from during 2012: Q4 to during. Source: Statistics SA (2013f) TABLE 4.25: Net balance of the BER manufacturing survey: paper and paper products 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes

35 TABLE 4.25: Net balance of the BER manufacturing survey: paper and paper products (Cont.) 2012: Q3 2012: Q4 2013: Q2* Domestic order volumes received Export order volumes received General business conditions Number of factory workers Fixed investment Business confidence Expected volume of goods imported in 12 months time Expected volume of goods exported in 12 months time Expected real investment in machinery and equipment in 12 months time Expected business conditions in 12 months time *Expected Source: BER (2013) The survey of manufacturing of paper and paper products presented in Table 4.25 shows that a year-on-year decrease in production and sales was expected during whereas the opposite was expected for exports. However, actual data show that all variables, except production, decreased during. In addition, business confidence shows that business conditions were unsatisfactory for the majority during the period. The outlook for 2013: Q2 is bleak for all the variables, except for exports RUBBER PRODUCTS The producer price of rubber products for domestic output increased year-on-year by 2,3% in the first quarter of 2013 while the producer price of rubber products for exported and imported rubber products showed little change. Compared to the previous quarter, the producer price index of rubber products for domestic output increased moderately by 3,5% but remained relatively unchanged for exported and imported rubber products (see Table 4.26). TABLE 4.26: Producer Price Index of rubber products (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Domestic output (2012=100) 101,0 99,8 101,2 2,3 3,5 Exported commodities 186,2 186,0 184,7-0,8 0,1 Imported commodities 125,4 125,3 126,0 0,5 0,1 Source: Statistics SA (2013c) The physical volume of production of rubber products during contracted by 8,6% following a 7,6% year-on-year decline in the previous quarter. Similarly, the quarter-to-quarter production volume decreased marginally by 0,2% during the first quarter of 2013, following a 1,8% quarterto-quarter contraction in the previous quarter (Figure 4.34). Source: Statistics SA (2013d) 25

36 TABLE 4.27: Utilisation and reasons for underutilisation of production capacity by large enterprises: rubber products (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 87,4 92,0 87,3 12,6 8,0 12,7 0,7 0,2 0,7 0,5 0,5 11,5 7,2 11,4 0,3 0,1 0,1 Source: Statistics SA (2013e) The utilisation of production capacity by large enterprise of rubber products in the first quarter of 2013 decreased marginally year-on-year and decreased moderately by 5,7 percentage points compared to the previous quarter. Insufficient demand remained the key reason behind low capacity utilisation and it increased by 4,2 percentage points compared to the previous quarter, followed by shortage of raw materials (see Table 4.27). The seasonally adjusted value of sales of rubber products decreased marginally by 0,4% yearon-year after showing a 5,0% contraction in the previous quarter (see Figure 4.35). However, the value of sales increased by 4,3% compared to the previous quarter that showed 0,5% quarterto-quarter growth in the previous quarter. The increase in the producer price during the quarter was the main reason for the declining value of sales during the period under review. Source: Statistics SA (2013d) Export of rubber products declined by 4,4% year-on-year during following a 13,6% contraction in the previous quarter. Import of rubber products, however, expanded by 16,4% year-on-year after showing a 10,8% growth in the preceding quar ter. Compared to the previous quarter, export of rubber products contracted by 8,6% while import increased by 9,9%. As a result, the trade deficit widened from R1 786,4 million in the previous quarter to a R2 104,1 million in 2013: Q1 (see Figure 4.36). Source: Statistics SA (2013) Following a quarter-to-quarter and year-on-year contraction in the volume of production and exports of rubber products during the first quarter of 2013, the year-on-year formal employment further decreased by 8.6%, while it in creased by 3,7% compared to the previous quarter (see Figure 4.37). As a result, the total number of formal employment in the rubber products division increased to during from in the previous quarter. Source: Statistics SA (2013f) 26

37 4.11 FURNITURE The producer price for both domestic output and imported furniture increased year-on-year by 2,4% and 0,6% respectively during. However, for imported furniture, no change was observed in the producer price. The producer price of domestic output for furniture recorded a similar growth of 1,0% as the previous quarter. Following no change in the previous quarter, the producer price for imported furniture increased marginally by 0,2%. The producer price for exported furniture, however, remained unchanged from the previous quarter (see Table 4.28). TABLE 4.28: Producer price index for furniture (Base 2000=100) Indices % change between 2012: Q1 2012: Q4 2012: Q1 and 2012: Q4 and Domestic output (2012=100) 99,4 100,8 101,9 2,4 1,0 Exported commodities 100,1 100,1 100,1 Imported commodities 92,9 93,3 93,5 0,6 0,2 Source: Statistics SA (2013c) The physical volume of production for furniture as shown in Figure 4.38, contracted by 6,6% year-on-year after a substantial growth of 9,2% in the previous quarter. Follow ing the quarter-to-quarter contraction of 3,2% in the previous quarter, the physical volume of production further decelerated by 9,0% during. Source: Statistics SA (2013d) TABLE 4.29: Utilisation and reasons for underutilisation of production capacity by large enterprises: furniture (percentage) Reasons for underutilisation Shortage of Period Utilisation Total underutilisation Raw materials Labour Skilled Semi and unskilled Insufficient demand Other 2012: Q1 2012: Q4 81,7 93,7 78,6 17,8 6,3 21,4 1,1 2,3 1,1 0,8 1,5 16,7 4,1 16,8 0,5 0,3 0,8 Source: Statistics SA (2013e) As shown in Table 4.29, there was a modest year-on-year decrease in utilisation of production capacity by the large enterprises in the division. Compared to the previous quarter, the utilisation of production capacity declined sharply and this is also reflected by the contraction of production volume in the division. Insufficient demand remained the main reason behind underutilisation of production capacity by the large enterprises. 27

38 During, the value of sales for furniture moderated considerably to 0,1% yearon-year from 13,3% growth registered in the preceding quarter, mainly because of a decrease in production volume in the division. Compared to the previous quarterto-quarter growth of 0,7%, the value of sales for furniture decelerated by 6,5% during the period as a result of the decline in production volume in the division (see Figure 4.39). Source: Statistics SA (2013d) Source: Quantec EasyData (2013) The value of exports for furniture declined by 10,4% year-on-year, following a marked contraction of 20,1% in the previous quarter. On the other hand, imports of furniture accelerated from 17,1% year-on-year in the previous quarter to 23,1% in. Compared to the previous quarter, both imports and exports showed a sharp contraction of 20,7% and 9,5%, respectively. Owing to the remarkable decrease in imports as compared to exports during, the trade deficit of furniture contracted from R698,7 million in the previous quarter to R477,3 million during the period (see Figure 4.40). Despite year-on-year decline in production volume and exports of furniture, formal employment in the furniture division increased by 3,9% year-on-year during the first quarter of However, following a quarter-toquarter contraction in production, formal employment declined by 6,7% compared to the previous quarter. As a result, formal employment in the division, which cam to in the previous quarter decreased to during the first quarter of 2013 (see Figure 4.41). TABLE 4.30: Net balance of BER manufacturing survey: furniture Source: Statistics SA (2013f) 2012: Q3 2012: Q4 2013: Q2* Domestic sales volumes Export sales volumes Production volumes Domestic order volumes received Export order volumes received General business conditions Number of factory workers Fixed investment Business confidence