Post on 27-Apr-2020
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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 employment 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 government 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 2016 evaluates the performance of the nine divisions within agro-
processing during the first quarter of 2016. These divisions, which are in line with the Standard
Industrial Classification are: 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 welcome.
Victor Mahlogedi Thindisa
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.
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CONTENTS
PREFACE ............................................................................................................................................... 1
EXECUTIVE SUMMARY ........................................................................................................................ 2
1. INTRODUCTION .......................................................................................................................... 4
2. OVERVIEW OF THE GLOBAL ECONOMY............................................................................... 4
3. STATE OF THE DOMESTIC ECONOMY ................................................................................ 7
4. THE AGRO-PROCESSING INDUSTRY ....................................................................................... 9
4.1 TOBACCO .......................................................................................................................... 10
4.2 TEXTILES ................................................................................................................................ 11
4.4 LEATHER AND LEATHER PRODUCTS .............................................................................. 19
4.5 FOOTWEAR ......................................................................................................................... 21
4.6 WOOD AND WOOD PRODUCTS .................................................................................. 24
4.7 PAPER AND PRINTED PRODUCTS .................................................................................. 28
4.9 FURNITURE ........................................................................................................................... 35
5. CONCLUSION ............................................................................................................................ 38
6. REFERENCES ............................................................................................................................... 39
EXECUTIVE SUMMARY
Compiled by: Directorate Agro processing Support
Department of Agriculture, Forestry and Fisheries
Sefala Building
503 Belvedere Street, Arcadia, South Africa
All correspondence can be addressed to:
Director: Agro-processing Support
Private Bag X416, Pretoria 0001, South Africa
Tel.: +27 (12) 319 8457
Fax: +27 (12) 319 8093
E-mail: VictorTH@daff.gov.za
This publication is also available on the internet at: http://www.daff.gov.za
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EXECUTIVE SUMMARY
The South African GDP contracted at an annualised rate of 1,2% driven mainly by the
decline in the primary sector (Agriculture and Mining). The production volume of most of the
divisions in the agro-processing industry decreased as compared to the previous quarter. The
divisions that showed negative production volumes were: rubber, furniture, wearing apparel,
footwear, food and leather and leather products. However, paper and paper products,
rubber and textiles showed positive production volumes.
Despite the decline in production volume of most of the agro-processing products, the
nominal value of sales of agro-processing increased marginally by 1,6% as compared to a
1,2% growth recorded in the previous quarter, representing an increase in the total value of
sales from R154 882,9 million in the preceding quarter to R157 360,6 million during the quarter
under review. The divisions that showed growth of sales are the following: footwear (9,4%),
paper and paper products (5,2%), wood and wood products (3,6%) leather and leather
products (2,3%), textiles (2,1%). However, furniture (6,7%), rubber (4,0%), wearing apparel
(3,7%) and beverages decline over the period, while food stagnated at 2,8%.
As a result of an increase in agro-processing import compared to the export, the trade deficit
of agro-processing products widened from R11 267,4 million in the previous quarter to R
13 830,6 million during the first quarter of 2016. The agro-processing products’ divisions that
showed a positive import growth were: footwear (34,6%), wood and wood products (14,8%),
wearing apparel (13,8%), tobacco (8,9%) and rubber (0,3%). However, beverages (29,8%),
food (11,4%), leather and leather products (10,8%), furniture (8,8%), textile (5,0%) and paper
and paper products (4,3%) division showed a negative import growth. On the other hand,
most of the agro-processing divisions showed a negative export growth : tobacco (44,2%),
furniture (28,6%), footwear (28,0%), beverages (13,5%0, rubber (24,6%), wearing apparel
(22,8%), leather and leather products (15,5%), textiles (13,5%), wood and wood products
(7,8%) and food (7,0%). However, paper and paper products showed a positive export
growth of 5,1%.
As a result of a decline in production volumes, during 2016: Q1, the agro-processing industry
shed 2 692 formal jobs. The agro-processing divisions that shed jobs were: paper and paper
products (1,731), wearing apparel (786), footwear (776), textiles (347), wood and wood
products (320), and rubber (9) divisions. However, beverages and food divisions created
1 011 and 420 jobs respectively.
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1. INTRODUCTION
The global economic growth recovered somewhat in the first quarter of 2016, after
decelerating remarkably in 2015: Q4. However, the South African economy shrank by 1,2%
driven mainly by the primary sector activities in agriculture and mining. The agriculture sector
decline over the period was marginal in comparison with the mining sector, which
contracted sharply over the same period. The manufacturing sector showed a positive
growth owing to an increase in the production of non-durable goods, especially in the wood
and wood products, and paper and publishing products division.
The quarterly review is organised as follows: section two and three, respectively, summarises
the global economy and the state of the domestic economy during the first quarter of 2016.
Section four provides the impact of the global and domestic economy on the nine 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 2016 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 levels a year ago.
2. OVERVIEW OF THE GLOBAL ECONOMY
The world manufacturing output projects 3,5% growth in 2017. This is attributed to projected
growth in advanced economies of 2,0%, with the United States and the euro area growth
rates of 2,5% and 1,6%, respective. However, China is expected to moderate at 6,2%, while
sub-Saharan Africa, Russia and South Africa to grow by 4,0%, 0,8% and 1,2%, respectively,
with India expected to stagnate at 7,5%. During 2016 quarter one, a sharp fall in production
was observed in Brazil as a result of overall economic recession, the trend has persisted for
quite some time (IMF, 2016).
Table 2.1: Overview of the world economic outlook projections (percentage change)
Projections
2015 2016 2017
World Output 3,1 3,2 3,5
Advanced Economies 1,9 1,9 2,0
US 2,4 2,4 2,5
Euro area 1,6 1,5 1,6
Japan 0,5 0,5 -0,1
Emerging markets and developing
economies
4,0 4,1 4,6
China 6,9 6,5 6,2
India 7,3 7,5 7,5
Russia -3,7 -1,8 0,8
5
Source: IMF (2016)
Subtle recovery growth prospects in developing and emerging industrial economies resulted
in the disappointing world manufacturing growth during 2016: Q1. China and India have
emerged as the largest global manufacturers in the aftermath of the stretched economic
crunch, they entered a transition period and adopted a more balanced pace, thus pushing
the average industrial growth of emerging industrial economies downhill. The United States
and Japan affected the world’s manufacturing growth by remaining stagnant during the
period (IMF ,2016). In South Africa, growth is projected to increase marginally by 1,2% in 2017.
Table 2.2: Seasonally adjusted estimated growth rates of world manufacturing output, 2016: 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 100,0 5,2 2,1
Industrialised economies 63,4 -0,3 0,3
North America 20,6 03 0,9
Europe 24,1 0,8 2,3
East Asia 15,4 -2,9 -2,9
Developing and emerging
industrial economies (by
development group)
36,6 12,7 4,7
China 19,9 20,2 7,4
Emerging industrial economies 14,5 0,2 -0,6
Other developing countries 1,9 -1,5 1,4
Developing and emerging
industrial economies (by region) 36,6 12,7 4,7
Africa 1,2 0,0 -0,8
Asia and pacific 26,0 16,5 6,3
Latin America 6,6 -0,7 -3,2
Others 2,8 1,5 3,8
Source: UNIDO (2016) and Quantec (2016)
Table 2.2 above represents the world manufacturing output growth rate during the first
quarter of 2016. Compared to the same period of the previous year (year-on-year), world
manufacturing output grew by 2,1%. The main contributor during the period of growth of the
world manufacturing output was the 63,4% growth of industrialised economies, which were
driven mainly by the growth rates of North America, Europe and East Asia, for the
Brazil -3,8 -3,8 0,0
Sub-Saharan Africa 3,4 3,0 4,0
South Africa 1,3 0,6 1,2
6
developing and emerging industrial economies, Asia and Pacific growths were major
contributors.
Table 2.3: Seasonally adjusted estimated growth rates of output by the manufacturing sector, 2016: Q1
(in % compared with the same period of the previous year).
Developing and
emerging
industrialised
economies
Industrialised
economies
South Africa World
Food products 3,9 1,2 1,0 2,4
Beverages 3,8 1,5 5,5 2,6
Textiles 6,1 1,0 -2,1 4,9
Wearing apparel, fur 3,6 -4,2 -3,5 2,1
Leather and related
products
2,3 -2,0 -6,4 (leather),
footwear (-6,0)
1,3
Wood products 4,3 3,3 5,0 3,7
Paper and paper products 4,3 -0,2 12,3 1,8
Rubber and plastic products 5,0 1,1 -2,8 2,6
Furniture 5,4 3,1 -14,3 3,9
Source: UNIDO (2015) and Quantec (2016)
Table 2.3 shows the seasonally adjusted growth rates of selected agro-processing industries in
the world for the first quarter of 2016 in percentage compared with the same period of the
previous year. The South African beverages, wood and wood products, and paper and
paper products for the agro-processing divisions performed well above both developing and
emerging industrialised economies, while furniture, footwear, wearing apparel and textiles
performed below developing and immerging industrialised economies. The footwear and
leather and other related leather products performed way below the world and developing
and emerging industrialised economies.
7
Table 2.4: Seasonally adjusted estimated growth rates of output by manufacturing sector, 2016: Q1 (in
% compared to 2015: Q4)
Developing and
emerging industrialised
economies
Industrialised
economies
South Africa World
Food products 10,7 0,5 -1,9 4,6
Beverages 8,3 1,1 -4,8 4,5
Textiles 18,9 0,3 2,7 14,1
Wearing apparel, 22,2 -1,3 -2,5 17,3
Leather and related
products
21,0 -0,3 -1,3 (leather)
-2,3
(footwear)
15,2
Wood products 23,1 1,4 5,4 8,9
Paper and paper products 17,5 -0,1 7,0 7,1
Rubber and plastic products 14,8 0,0 -9,7 5,2
Furniture 11,1 0,9 -8,4 4,3
Source: UNIDO (2016) and Quantec (2016)
Table 2.4 shows quarter-to-quarter seasonally adjusted growth rates of agro-processing
industries during the first quarter of 2016. All South African agro-processing divisions as
indicated in the table above performed below the developing and emerging industrialised
economies. This is due to the dry weather conditions that adversely affected the crop and
livestock production in most areas of South Africa; owing to the agro-processing strong
backward linkage with the primary agricultural sector. However, food, beverages, textiles,
wearing apparel, wood, paper, rubber and plastic products divisions performed above the
industrialised economies.
3. STATE OF THE DOMESTIC ECONOMY
Table 3.1 below shows the South African growth rate at seasonally adjusted annualised rates.
The South African GDP contracted at an annualised rate of 1,2% following a depressing
growth of 0,4% in 2015: Q4. The decline is driven mainly by contractions in the primary and
the mining sector. The primary sector, among other factors, declined due to severe drought
conditions, while that of the mining sector is a result of weak global demand and lower
commodity prices. However, the secondary sector, grew marginally by 0,2% as compared to
the last quarter of 2015 during the period, underpinned by increased production in durable
and non-durable products. (Reserve bank, 2016).
8
Table 3.1: South African economic growth rate (percentage change at seasonally adjusted annualised
rates
Sector
2015 2016
Q1 Q2 Q3 Q4 YEAR Q1
Primary sector 6,3 -10,9 -10,8 -0,5 0,9 -15,5
Agriculture -11,3 -20,4 -11,8 -6,7 -5,9 -6,5
Mining 12,7 -7,8 -10,5 1,4 3,2 -18,1
Secondary sector -0,4 -4,9 2,5 -1,3 0,0 0,2
Manufacturing -2,1 -6,3 4,7 2,5 -0,3 0,6
Tertiary sector 1,7 0,8 1,5 1,4 1,6 0,8
Non-primary sector 1,2 -0,5 1,7 0,8 1,3 0,7
Total 2,0 -2,0 0,3 0,4 1,3 -1,2
Source: Reserve Bank (2015)
Source: Statistics SA (201a)
During 2016: Q1, the unemployment statistic recorded by Statistics SA, shows that
unemployment rate in South Africa has gone up to 26,7% as compared to 24,5% in the last
quarter. Between Q4: 2015 and Q1: 2016, the number of employed people in the formal
sector decreased in six industries. The largest decreases were observed in construction,
manufacturing and trade industries. However, gains were observed in the community and
social services and in transport industries. During this period, job losses were observed in the
manufacturing, utilities and construction industries of114 000, 32 000 and 12 000, respectively
(StatsSA, 2016).
22.5
23.0
23.5
24.0
24.5
25.0
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26.5
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Figure 3.1: Quarterly unemployment rate
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Source: Statistics SA (2016)
During 2016: Q1, the average consumer and producer price inflation increased modestly by
6,6% and 7,6% following a growth of 4,8% and 4,4%, respectively, in the previous quarter. The
increase in the consumer price inflation was driven by increase in prices of bread and cereal
(12,0%), oils and fats (19,7%), sugar, sweets and desserts (11,3%). Similarly, the producer price
inflation increases was driven by increases in grain mill products, (starches and starch
products, animal feeds (16,3%)), fish and fish products (10,7%) and other food products
(10,3%).
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 the agriculture,
forestry and fisheries sectors. According to the Standard Industrial Classification, the agro-
processing industry comprises of 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 nine divisions1 during the first quarter of 2016, given the global
and domestic economic situation during the period.
1 The Directorate: Agro-processing Support prepares a separate economic review for the food and beverage industry. However,
in this report when the overall agro-processing industry’s sales, export, import and employment is reported the eleven divisions including the food and beverages are incorporated.
01
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Figure 3.2: Total CPI and PPI inflation
CPI PPI
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4.1 TOBACCO
The quarter-to-quarter and year-on-year producer price index of tobacco increased by 6,3%
and 1,8%, respectively during the current period (see Table 4.1).
Table 4.1: Producer price index for tobacco products (base 2012 = 100)
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
117,7 122,9 125,1 6,3 1,8
Source: Statistics SA (2016c)
Source: Quantec EasyData (2016)
The year-on-year and quarter-to-quarter export of tobacco contracted by 16,1% and 44,2%
following growths of 29,0% and 49,0%, respectively, as recorded in the previous quarter.
However, the quarter-to-quarter import of tobacco moderated by 8,8% following a 64,3%
growth registered in the preceding quarter. On the other hand, tobacco year-on-year,
increased significantly by 87,3% from a 64,3% growth in the last quarter. As a result, the trade
surplus narrowed from R772,1 million in the fourth quarter of 2015 to R304,1 million in the first
quarter of 2016 (see Figure 4.1).
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Figure 4.1: Quarterly trade balance of tobacco
Export Import
11
Source: Statistics SA (2015f)
During the first quarter of 2016, the quarter-to-quarter formal employment in the beverage
and tobacco division moderated by 2,5%, following a growth of 2,8% registered in the
previous quarter. However, the year-on-year, number of formal employment contracted by
2,2%, following a growth of 0,8% registered during the last quarter of 2015. As a result, 1 011
jobs were created in the first quarter of 2016 (see Figure 4.2.)
4.2 TEXTILES
Table 4.2 presents the producer price index for textiles during the first quarter of 2016. The
year-on-year and quarter-to-quarter producer price for textiles division increased by 7,7%,
and 1,0%, respectively.
Table 4.2: Producer price index for textiles (base 2012=100)
Source: Statistics SA (2016a)
37 00037 50038 00038 50039 00039 50040 00040 50041 00041 50042 00042 500
201
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2
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5:Q
4
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6 :Q
1
Figure 4.2: Number of formal employment: beverage and
tobacco products
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
Textile 111,4 118,1 119,1 7,7 1,0
12
Source: Statistics SA (2016d)
The year-on-year and quarter-to-quarter seasonally adjusted physical volume of production
for textiles division rebounded by 3,4% and 4,6% following contractions of 2,7% and 2,1%,
respectively in the previous quarter. Similarly, quarter-to-quarter volume of production for
other textiles rebounded by 0,9% following a contraction of 0,8% in the previous quarter.
However, the year-on-year volume of production for other textiles decelerated by 7,0%
following a contraction of 8,2% registered in the preceding quarter (see Figure 4.2).
Table 4.3: Utilisation and reasons for underutilisation of production capacity by large enterprises: Textiles
(percentage)
Period Utilisation Reasons for under-utilisation
Total
under-
utilisation
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 70,1 29,1 1,2 0,3 0,0 24,0 3,5
2015: Q4 70,0 30,0 1,1 0,6 0,0 25,6 2,8
2016: Q1 69,1 30,9 1,2 0,6 0,0 26,3 2,8
Source: Statistics SA (2016e)
Table 4.3 shows that the utilisation of production capacity by large enterprises in the textiles
division moderated year-on-year and quarter-to-quarter. Insufficient demand was the main
reason for the under-utilisation of production capacity by large enterprises of textiles,
followed by other reasons such as downtime due to maintenance and shortage of raw
materials.
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Ind
ex (
2010 =
100)
Figure 4.2: Seasonally adjusted physical volume of
production: textiles
Textiles Other textile products
13
Source: Statistics SA (2016d)
During the current period, the year-on-year and quarter-to-quarter physically adjusted value
of sales for textiles increased significantly by 11,9% and 5,6% following growths of 2,8% and
1,1%, respectively in the previous quarter. However, quarter-to-quarter value of sales for other
textile products rebounded by 0,3% from a 1,0% contraction recorded in the preceding
quarter. On the other hand, year-on-year value of sales of other textiles products division
decelerated by 1,2% following a contraction of 1,1% in the previous quarter (see Figure 4.3).
Source: Quantec EasyData (2016)
Figure 4.4 shows the quarterly trade balance of textiles division during the first quarter of 2016.
The quarter-to-quarter export of textiles contracted by 13,4% from a growth of 6,2% in the
previous quarter, while the year-on-year export of textiles increased modestly by 11,2% in the
first quarter of 2016 following a growth of 6,9% in the previous quarter. The quarter-to-quarter
import of textiles decelerated by 5,0% following a contraction of 0,1% in the previous quarter.
0500
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Figure 4.3: Seasonally adjusted value of sales (current
prices): textiles
Textiles Other textile products
0500
1 0001 5002 0002 5003 0003 5004 0004 500
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Figure 4.4: Quarterly trade balance of textiles
Export Import
14
Conversely, the year-on-year textile import moderated by 7,1% following a 21,7% growth in
the fourth quarter of 2015. As a result, the trade deficit of the textile division widened by R2
336,8 million in the first quarter of 2016 from R2 308,3 million registered in the last quarter.
Source: Statistics SA (2016f)
The year-on-year and quarter-to-quarter number of formal employment for other textiles and
preparation and spinning of textile fibres contracted by 4,3% and 0,9% following growth of
0,5% and 1,6%, respectively in the previous quarter. However, it decelerated by 1,1% quarter-
to-quarter for other textiles and moderated by 46,9% year-on-year for preparation and
spinning of textile year-on-year. As a result, a total of 347 jobs were shed in the division in the
current period (see Figure 4.5).
Table 4.4: Net balance of the BER manufacturing survey: Textiles
2015: Q3 2016: Q4 2016: Q1 2016: Q2*
Domestic sales volumes -13 44 -17 14
Export sales volumes -20 8 0 19
Production volumes -32 40 -37 31
Domestic order volumes received -18 52 -21 -2
Export order volumes received -20 4 -4 19
General business conditions -42 -59 -55 -16
Number of factory workers -27 33 -39 -7
Fixed investment -10 60 -7 5
Business confidence 16 30 20
Expected volume of goods imported in 12
months’ time 61 -13 -19
Expected volume of goods imported in 12
months’ time 11 20 25
Expected volume of goods exported in 12
months’ time -8 36 -7
0
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Figure 4.5: Number of formal employment: textiles
Preparation and spinning of textile fibres; weaving of textiles
Other textiles
15
Expected business conditions in 12 months’
time -58 -90 -41
*Expected Source: BER (2016)
Table 4.4 presents the manufacturing survey of the textile division conducted by BER during
the first quarter of 2016. The year-on-year outlook for the second quarter of 2016 shows that
most variables are positive, except for domestic order volume received, general business
conditions and employment.
4.3 WEARING APPAREL
Table 4.5 shows that during the first quarter of 2016, the year-on-year and quarter-to-quarter
producer price index for domestic wearing apparel output increased by 6,7% and 1,0%,
respectively.
Table 4.5: Producer price index for wearing apparel (base 2012 = 100)
Source: Statistics SA (2016c)
Source: Statistics SA (2016d)
Figure 4.6 shows that the quarter-to-quarter and year-on-year physical volume of production
for wearing apparel decelerated by 5,8% and 7,5% following contractions of 0,8% and 3,1%,
respectively in the previous quarter. However, the quarter-to-quarter and year-on-year
physical volume of production for knitted or crocheted fabrics rebounded by 3,8% and 4,4%
following contraction of 7,8 and 4,6%, respectively as recorded in the previous quarter.
50
60
70
80
90
100
110
20
11
: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
20
13
: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
20
15
: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
Ind
ex (
2010 =
100)
Figure 4.6: Seasonally adjusted physical volume of production:
Wearing apparel
Wearing apparel Knitted or crocheted fabrics
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
Domestic output
Wearing apparel 116,8 122,5 123,5 6,7 1,0
16
Table 4.6: Utilisation and reasons for underutilisation of production capacity by large enterprises:
Wearing apparel (percentage)
Period Utilisation Reasons for underutilisation
Total
underutili
sation
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 79,5 20,5 0,6 0,9 0,3 16,6 2,2
2015: Q4 79,4 20,6 0,6 1,4 0,4 14,9 3,3
2016: Q1 78,3 21,7 0,8 1,4 0,4 15,6 3,4
Source: Statistics SA (2016e)
Table 4.6 shows that the utilisation of production capacity by large enterprises in the wearing
apparel division moderated year-on-year and quarter-to-quarter. Insufficient demand
remained the key reason behind low capacity utilisation, followed by other reasons such as
lower productivity.
Source: Statistics SA (2016d)
Figure 4.7 shows that the year-on-year seasonally adjusted value of sales for wearing apparel
division moderated by 0,5% following a growth of 2,0% in the fourth quarter of 2015, while the
quarter-to-quarter recorded a contraction of 4,5% from a 1,4% growth in the previous
quarter. However, year-on-year seasonally adjusted value of knitted and crocheted articles
increased modestly by 8,2%, following a rebound of 4,2% in the preceding quarter, while
quarter-to-quarter adjusted value of sales of knitted and crocheted articles rebounded by
1,5% following a 2,5% growth recorded in the fourth quarter of 2015.
0500
1 0001 5002 0002 5003 0003 5004 0004 500
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
20
14
: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
20
16
: Q
1
R m
illio
n
Figure 4.7: Seasonally adjusted value of sales (current
prices): wearing apparel
Wearing apparel Knitted, crocheted articles
17
Source: Quantec EasyData (2016)
Figure 4.8 shows the quarterly trade balance of wearing apparel. The year-on-year export of
wearing apparel moderated by 1,1% following a growth of 2,7% registered in the previous
quarter; whereas, quarter-to-quarter contracted by 22,7% following a growth of 10,6% in the
previous quarter.
On the other hand, quarter-to-quarter import of wearing apparel increased significantly by
13,8% following a 1,3% growth registered in the fourth quarter of 2015. Similarly, year-on-year
moderated by 25,3% following a 27,1% growth in the preceding quarter. As a result, the trade
deficit of the wearing apparel industry widened from R5 389,7 million in the previous quarter
to R6 734,4 million during the current quarter.
Source: Statistics SA (2016f)
During the first quarter of 2016, the quarter-to-quarter and year-on-year formal employment
for wearing apparel decelerated by 2,1% and 8,0%, following a growth of 1,2% and 4,2%,
respectively as recorded in the previous quarter. On the other hand, the quarter-to-quarter
01 0002 0003 0004 0005 0006 0007 0008 0009 000
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.8: Quarterly trade balance of wearing apparel
Export Import
0
10 000
20 000
30 000
40 000
50 000
201
5: Q
1
201
5: Q
2
201
5:Q
3
201
5:Q
4
201
6 :Q
1
Figure 4.9: Number of formal employment: wearing
apparel
Knitted and crocheted fabrics and articles
Wearing apparel, except fur;dressing and dying of fur, articles of fur
18
formal employment for knitted and crocheted fabric and articles rebounded by 0,6%,
however, moderated by 2,4% year-on-year. As a result, 786 jobs were shed in the wearing
apparel industry in the quarter under review (see Figure 4.3).
Table 4.7: Net balance of the BER manufacturing survey: Clothing
2015: Q3 2015: Q4 2016: Q1 2016: Q2*
Domestic sales volumes 93 63 0 -47
Export sales volumes 91 29 1 1
Production volumes 97 50 2 -44
Domestic order volumes received 93 63 5 -49
Export order volumes received 91 44 72 -2
General business conditions 0 -65 -71 -88
Number of factory workers 98 34 8 -43
Fixed investment 54 31 75 -1
Business confidence 61 66 9
Expected volume of goods imported in 12
months’ time 49 14 40
Expected volume of goods exported in 12
months’ time 94 -84 8
Expected real investment in machinery and
equipment in 12 months’ time 35 87 -37
Expected business conditions in 12 months’
time -40 -77 -80
*Expected Source: BER (2016)
Table 4.7 presents the manufacturing survey of the clothing division conducted by BER during
the first quarter of 2016; the year-on-year outlook for the second quarter of 2016 shows that
most variables are expected to decrease, except for export sales volumes.
19
4.4 LEATHER AND LEATHER PRODUCTS
Source: Statistics SA (2016d)
The year-on-year seasonally adjusted physical volume of production for leather and leather
products remained stagnated at a negative growth of 6,5% during the first quarter of 2016.
However, the quarter-to-quarter volume of production for leather and leather products
somewhat improved from a contraction of 6,7% registered in the previous quarter to a
negative growth of 1,3% in the current quarter (See Figure 4.10).
Table 4.8: Utilisation and reasons for underutilisation of production capacity by large enterprises:
Leather and leather products (percentage)
Period Utilisation Reasons for under-utilisation
Total
under-
utilisation
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 70,3 29,7 4,5 0,2 0,6 22,5 1,9
2015: Q4 74,4 25,6 4,0 0,6 1,3 17,4 2,2
2016: Q1 74,7 25,3 4,0 0,6 1,3 17,7 1,7
Source: Statistics SA (2016e)
The utilisation of production capacity by large enterprises in the leather and leather products
division increased modestly year-on-year and increased marginally quarter-to-quarter.
Among the reasons for under-utilisation, insufficient demand remained the main reason,
followed by shortage of raw materials and other reasons such as seasonal factors.
50
60
70
80
90
100
110
120
130
140201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
Ind
ex (
2010 =
100)
Figure 4.10: Seasonally adjusted physical volume of
production: leather and leather products
20
Source: Statistics SA (2016d)
The quarter-to-quarter seasonally adjusted value of sales for leather and leather products
division rebounded by 2,2% following a contraction of 7,2% it registered in the previous
quarter. On the other hand, the year-on-year value of sales increased modestly by 5,0%,
following a growth of 1,2% in the previous quarter (see Figure 4.11).
Source: Quantec EasyData (2016)
Figure 4.12 presents the quarterly trade balance of leather and leather products division. The
year-on-year export of leather moderated by 9,7% following a growth of 10,3% in the
preceding quarter, whereas quarter-to-quarter export of leather contracted by 15,5%
following a 12,0% growth recorded in the previous quarter. However, the year-on-year import
increased marginally by 5,7% following a growth of 4,6% in the previous quarter. Conversely,
quarter-to-quarter import of leather decelerated by 10,7% following a contraction of 3,3% in
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
2 000
20
11
: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
20
12
: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.11: Seasonally adjusted value of sales (current
prices): leather and leather products
0
200
400
600
800
1 000
1 200
1 400
20
11
: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
20
12
: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.12: Quarterly trade balance of leather and leather
products
Export Import
21
the preceding quarter. As a result, the trade deficit widened from the R282,6 million recorded
in the previous quarter to R294,8 million registered during the first quarter of 2016.
Source: Statistics SA (2016f)
The year-on-year formal employment in the leather and leather products division increased
marginally by 2,1% following a growth of 0,2% recorded in the previous quarter. However, the
year-on-year formal employment in the leather and leather products contracted by 0,5% as
compared to a 1,1% registered in the previous quarter. As a result, 98 jobs were created in
the first quarter of 2016 (see Figure 4.13).
4.5 FOOTWEAR
The year-on-year and quarter-to-quarter producer price index of footwear for domestic
output increased by 8,8 % and 1,0%, respectively during the first quarter of 2016 (see Table
4.9).
Table 4.9: Producer price index for footwear (base 2012 = 100)
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
Domestic output
110,3 118,1 119,1 8,8 1,0
Source: Statistics SA (2016c)
3 0003 2003 4003 6003 8004 0004 2004 4004 6004 800
201
5: Q
1
201
5: Q
2
201
5:Q
3
201
5:Q
4
201
6 :Q
1
Figure 4.13: Number of formal employment: leather
and leather products
22
Source: Statistics SA (2016d)
The year-on-year seasonally adjusted physical volume of production for footwear division
decelerated by 6,0% during first quarter of 2016 following a contraction of 2,0% registered in
the previous quarter. However, the quarter-to-quarter seasonally adjusted physical volume of
production for footwear products contracted by 2,3% following a growth of 4,4% recorded in
the previous quarter (see Figure 4.14).
Table 4.10: Utilisation and reasons for underutilisation of production capacity by large enterprises:
Footwear (percentage)
Period Utilisation Reasons for under-utilisation
Total
under-
utilisation
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 86,8 13,2 0,0 0,0 0,0 9,8 0,6
2015: Q4 84,0 16,0 1,3 0,0 0,0 14,2 0,0
2016: Q1 84,9 15,1 1,9 0,0 0,0 12,4 0,0
Source: Statistics SA (2016e)
The utilisation of production capacity by large enterprises in the footwear division moderated
year-on-year and increased marginally quarter-to-quarter during the first quarter of 2016. The
quarter-to-quarter increase in capacity utilisation is not consistent with the decrease of
production of the division during the current period. Insufficient demand is the main reason
behind low capacity utilisation, followed by shortage of raw materials (see Table 4.10).
50
60
70
80
90
100
110
120
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
20
14
: Q
3
20
14
: Q
4
20
15
: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
Ind
ex (
2010 =
100)
Figure 4.14: Seasonally adjusted physical volume of
production: footwear
23
Source: Statistics SA (2016d)
The year-on-year seasonally adjusted value of sales for the footwear division rebounded by
12,2%, following a contraction of 0,4% in the previous quarter. During the first quarter of 2016,
the quarter-to-quarter value of sales accelerated by 9,5% following a growth of 3,1% it
registered in the previous quarter (see Figure 4.15).
Source: Quantec EasyData (2016)
Figure 4.16 shows that year-on-year export of footwear moderated by 1,1% following a
growth of 2,7% in the preceding quarter. However, the quarter-to-quarter export of footwear
division contracted by 28,0% following a growth of 15,8% the previous quarter. On the other
hand, year-on-year import of footwear increased modestly by 20,2% following a 11,0%
growth in the fourth of quarter in 2015; while quarter-to-quarter import rebounded by 34,6%
following a contraction of 18,3% it registered in the previous quarter. As a result, the trade
deficit of the division widened from R1 175,0 million in the fourth quarter of 2015 to R1 834,0
million in the first quarter of 2016.
0
200
400
600
800
1 000
1 200
1 400
1 600
201
1: Q
1
20
11
: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
20
14
: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.15: Seasonally adjusted value of sales (current
prices): footwear
0
500
1 000
1 500
2 000
2 500
201
1: Q
1
201
1: Q
2
20
11
: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.16: Quarterly trade balance of footwear
Export Import
24
Source: Statistics SA (2016f)
The quarter-to-quarter and year-on-year formal employment in the footwear division
decelerated by 8,6% and 7,6%, following a 2,2% and 2,8%, respective growths registered in
the preceding quarter. As a result of the decline in the growth of footwear division, 776 jobs
were shed under the quarter (see Figure 4.17).
4.6 WOOD AND WOOD PRODUCTS
The producer price for domestic output of wood and paper products grew year-on-year and
quarter-to-quarter by 5,3% and 1,0% respectively during the first quarter of 2016 (see Table
4.11).
Table 4.11: Producer price index for wood and paper products division (base 2012 = 100)
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
Domestic output
118,3 122,6 123,6 5,3 1,0
Source: Statistics SA (2016c)
6 000
6 500
7 000
7 500
8 000
8 500
9 000
9 500
20
15
: Q
1
201
5: Q
2
201
5:Q
3
201
5:Q
4
201
6 :Q
1
Figure 4.17: Number of formal employment: footwear
25
Source: Quantec EasyData (2016)
The quarter-to-quarter physical volume of production for sawmilling and planning of wood
and wood products rebounded by 3,0% and 8,1% in the first quarter of 2016, following
contractions of 2,7% and 1,3%, respectively in the previous quarter. However, the year-on-
year physical volume of sawmilling and planning of wood moderated by 2,0% following a
5,4% growth recorded in the preceding quarter and substantially increased by 8,7% for
products of wood (see Figure 4.18).
Table 4.12: Utilisation and reasons for underutilisation of production capacity by large
enterprises: Wood and wood products (percentage)
Period Utilisatio
n
Reasons for underutilisation
Total
underutilisa
tion
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 82,7 17,3 2,0 1,8 0,1 9,5 3,9
2015: Q4 83,0 17,0 1,1 1,0 0,1 9,7 5,1
2016: Q1 82,9 17,1 1,5 0,9 0,1 9,8 4,9
Source: Quantec EasyData (2016)
Table 4.12 shows utilisation of production capacity by large enterprises in the wood and
wood division. The year-on-year utilisation of production capacity registered a marginal
growth as compared to a slight decline quarter-to-quarter. The quarter-to-quarter decrease
in the utilisation of production capacity is consistent with the decrease in volume of
50
60
70
80
90
100
110
120
130
140
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
Ind
ex (
2010 =
100)
Figure 4.18: Seasonally adjusted physical volume of
production: wood and wood products
Sawmilling and planing of wood Products of wood
26
production of wood and wood products. Insufficient demand remained a reason for
underutilisation followed by other reasons such as downtime due to maintenance.
Source: Statistics SA (2016d)
The quarter-to-quarter sawmilling and planning of wood and products of wood rebounded
by 1,1% and 5,0% following contraction of 1,8% and 0,2%, respectively as recorded in the
previous quarter. However, the year-on-year value of sales for sawmilling and planning of
wood moderated by 7,7%, following a growth of 14,2% in the previous quarter, nonetheless,
it increased modestly by 8,2% for products of wood following a 5,5% growth recorded in the
preceding quarter (see Figure 4.19).
Source: Quantec EasyData (2016)
0
1 000
2 000
3 000
4 000
5 000
6 000
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
20
14
: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.19: Seasonally adjusted value of sales (current
prices): wood and wood products
Sawmilling and planing of wood Products of wood
0
200
400
600
800
1 000
1 200
1 400
1 600
1 800
20
11:
Q1
20
11:
Q2
20
11:
Q3
20
11:
Q4
20
12:
Q1
20
12:
Q2
20
12:
Q3
20
12:
Q4
20
13:
Q1
20
13
: Q
2
20
13:
Q3
20
13:
Q4
20
14:
Q1
20
14:
Q2
20
14:
Q3
20
14:
Q4
20
15:
Q1
20
15:
Q2
20
15
: Q
3
20
15:
Q4
20
16:
Q1
R m
illio
n
Figure 4.20: Quarterly trade balance of wood and wood
products
Export Import
27
The quarter-to-quarter import of wood and wood products increased substantially by 14,8%
following a 6,1% growth in the preceding quarter, but moderated by 18,0% year-on-year
following a growth of 19,3 % in the preceding quarter. On the other hand, the quarter-to-
quarter export contracted by 7,8% following a growth of 10,2% in the previous quarter,
however, moderated year-on-year by 3,7%, following a 15,4% growth in the preceding
quarter. As a result, the trade surplus narrowed from R370,4 million in the previous quarter to
R40,8 million in the period under review (see Figure 4.20).
Source: Statistics SA (2016f)
The quarter-to-quarter formal employment of sawmilling and planning of wood rebounded
by 1,3% following a contraction of 5,0% registered in the preceding quarter. However, the
year-on-year formal employment accelerated by 8,0% as compared to a 1,8% growth
recorded in 2015: Q4. On the other hand, the quarter-to-quarter formal employment of
wood and wood products decelerated by 2,0%, but moderated by 4,5% year-on-year. As a
result, the wood and wood products and sawmilling and planning of wood industry shed 320
jobs in the current period.
Table 4.13: Net balance of the BER manufacturing survey: Wood and wood products
2015: Q3 2015: Q4 2016: Q1 2016: Q2*
Domestic sales volumes 42 -91 -77 20
Export sales volumes -26 -61 -91 4
Production volumes 81 -90 -87 20
Domestic order volumes received 42 -71 -38 0
Export order volumes received -90 -61 -91 6
General business conditions -1 -36 -43 -22
Number of factory workers -26 -77 -10 -7
Fixed investment -29 -15 85 84
10 000
15 000
20 000
25 000
30 000
201
5: Q
1
20
15
: Q
2
201
5:Q
3
201
5:Q
4
201
6 :Q
1
Figure 4.21: Number of formal employment: wood and
wood products
Sawmilling and planing of wood Products of wood
28
2015: Q3 2015: Q4 2016: Q1 2016: Q2*
Business confidence 68 2 20
Expected volume of goods
imported in 12 months’ time -1 -98 -32
Expected volume of goods
exported in 12 months’ time -90 -43 26
Expected real investment in
machinery and equipment in 12
months’ time 42 67 52
Expected business conditions in 12
months’ time -100 -69 -76
*Expected Source: BER (2016)
Table 4.13 presents the manufacturing survey of the wood and wood products division by
BER during the first quarter of 2016. The year-on-year outlook for the second quarter of 2016 is
positive for most variables except general business conditions and employment.
4.7 PAPER AND PRINTED PRODUCTS
The producer price for domestic output of paper and printed products grew year-on-year
and quarter-to-quarter by 5,4% and 1,0%, respectively during the first quarter of 2016 (see
Table 4.14).
Table 4.14: Producer price index for paper and paper products (base 2012 = 100)
Source: Statistics SA (2016c)
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
Domestic output
Paper and paper
products
118,6 123,0 124,0 5,4 1,0
29
Source: Statistics SA (2016d)
The quarter-to-quarter and year on year physical volume of production for paper and paper
products division rebounded by 7,0% and 12,3% following a contraction of 1,8% and 2,6%,
respectively as recorded in the preceding (see Figure 4.22).
Table 4.15: Utilisation and reasons for underutilisation of production capacity by large enterprises: Paper
and paper products (percentage)
Period Utilisation Reasons for underutilisation
Total
underutilisati
on
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 84,4 15,6 0,6 1,6 0,3 6,7 6,5
2015: Q4 86,7 13,3 0,8 1,6 0,2 4,0 6,7
2016: Q1 85,9 14,1 0,5 1,8 0,2 5,9 5,7
Table 4.15 shows utilisation of production capacity by large enterprises in the paper and
paper division. The year-on-year utilisation increased marginally, while it decreased
marginally quarter-to-quarter. Insufficient demand remained the main reasons for
underutilisation of production capacity followed by other reasons such as seasonal factors
and shortage of skilled labours
50
60
70
80
90
100
110
120
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
20
16
: Q
1
Ind
ex (
2010 =
100)
Figure 4.22: Seasonally adjusted physical volume of
production: paper and paper products
30
Source: Statistics SA (2016d)
During 2016: Q1, the quarter-to-quarter and year-on-year value of sales of paper and paper
products division increased substantially by 5,2% and 14,2% following growths of 0,5% and
6,0% recorded in the fourth quarter of 2015 (see Figure 4.23).
Source: Quantec EasyData (2016)
The quartet-to-quarter import of paper and paper products contracted by 4,3% following a
growth of 2,7% in the previous quarter. However, the year-on-year increased modestly by
17,7% following a growth of 13,7% in the preceding quarter. On the other hand, the quarter-
to-quarter export moderated by 5,0% following a growth of 6,9% in the previous quarter. In
addition, the year-on-year export increased significantly by 39,2% following a growth of 28,0%
in the preceding quarter. As a result, the trade surplus widened from R1 111,4 million in the
previous quarter to R1 621,0 million during the first quarter of 2016 (see Figure 4.24).
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
20 000
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.23: Seasonally adjusted value of sales (current
prices): paper and paper products
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
20
12
: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
20
13
: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.24: Quarterly trade balance of paper and paper
products
Export Import
31
Source: Quantec EasyData (2016)
The quarter-to-quarter and year-on-year formal employment in the paper and paper
products division decelerated by 4,6% and 6,8% following a contraction of 0,7% and 3,8% in
the preceding quarter of 2015 (see Figure 4.25). As a result, 1 731 jobs were shed in the
current quarter.
Table 4.16: Net balance of the BER manufacturing survey: Paper and paper products
2015: Q3 2015: Q4 2016: Q1 2016:Q2*
Domestic sales volumes 23 21 7 7
Export sales volumes 8 -42 2 -29
Production volumes -6 -29 -17 40
Domestic order volumes received 20 21 6 7
Export order volumes received 8 -5 -29 2
General business conditions -26 -5 -46 -49
Number of factory workers 4 7 -2 0
Fixed investment 6 46 65 67
Business confidence 28 19 83
Expected volume of goods imported
in 12 months’ time 4 26 1
Expected volume of goods exported
in 12 months’ time 3 49 -15
Expected real investment in
machinery and equipment in 12
months’ time 3 49 -15
25 000
27 000
29 000
31 000
33 000
35 000
37 000
39 000
41 000
20
15:
Q1
20
15:
Q2
20
15
:Q3
201
5:Q
4
20
16 :
Q1
Figure 4.25: Number of formal employment: paper and
paper products
32
Expected business conditions in 12
months’ time 18 36 -12
*Expected Source: BER (2016)
Table 4.16 shows the manufacturing survey of the paper and paper products division by BER
during the first quarter of 2016. The year-on-year outlook for the second quarter of 2016 is
positive for most of the variables except export sales volumes and general business
conditions. However, the outlook for employment remains unchanged as compared to the
current period.
4.8 RUBBER PRODUCTS
The producer price for domestic output of rubber and plastic products grew year-on-year
and quarter-to-quarter by 3,3% and 1,0%, respectively in the first quarter of 2016 (see Table
4.17).
Table 4.17: Producer price index for rubber products (base 2012 = 100)
Source: Statistics SA (2016c)
Source: Statistics SA (2016d)
50
60
70
80
90
100
110
120
130
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
Ind
ex (
2010 =
100)
Figure 4.26: Seasonally adjusted physical volume of
production: rubber products
Indices % change between
2015:
Q1
2015:
Q4
2016: Q1 2015: Q1
and
2016: Q1
2015: Q4 and
2016: Q1
Domestic output
Rubber products 117,3 119,7 120,7 3,3 1,0
33
The quarter-to-quarter and year-on-year physical volume of production for rubber products
decelerated by 9,0% and 2,8% in the first quarter of 2016 following contractions of 0,6% and
0,3%, respectively as recorded in the fourth quarter of 2015. (see Figure 4.26).
Table 4.18: Utilisation and reasons for underutilisation of production capacity by large enterprises:
Rubber products (percentage)
Period Utilisation Reasons for underutilisation
Total
underutilisati
on
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 78,2 21,8 0,4 0,9 0,0 16,6 3,9
2015: Q4 82,4 17,6 0,5 0,9 0,0 13,4 2,8
2016: Q1 82,2 17,8 0,5 0,9 0,0 13,6 2,8
As seen in Table 4.18, the year-on-year utilisation of production capacity by large enterprises
in rubber products division increased modestly, However, decreased marginally quarter-to-
quarter. The decrease in utilisation is consistent with the decline in the volume of production.
Insufficient demand remains the main reason for utilisation, followed by other reason such as
seasonal factors and lower productivity.
Source: Statistics SA (2016d)
The quarter-to-quarter value of sales in the rubber products division decelerated by 4,0% in
first quarter of 2016 following a contraction of 2,3% in the previous quarter (see Figure 4.27).
However, the year-on-year value of sales increased modestly by 2,3% following a growth of
0,1% recorded in the fourth quarter of 2015.
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
4 500
5 000
201
1: Q
1
20
11
: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
20
14
: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.27: Seasonally adjusted value of sales (current
prices): rubber products
34
Source: Statistics SA (2016)
The quarter-to-quarter import of rubber products rebounded by 0,3% following a contraction
of 3,3% in the previous quarter, while year-on-year for import rubber products moderated by
9,7%, following a growth of 11,7% in the fourth quarter of 2015. On the other hand, the
quarter-to-quarter and year-on-year export of rubber products division contracted by 24,5%
and 1,1% following growths of 10,7% and 8,0%, respectively as recorded in the preceding
quarter (see Figure 4.28). As a result, the trade deficit widened from R3 293,2 million in the
previous quarter to R3 929,1 million in the first quarter of 2016.
Source: Statistics SA (2016e)
The quarter-to-quarter formal employment in the rubber products division decelerated by
0,1%, following a growth of 0,3% in the previous quarter. While the year-on-year moderated
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
20
12
: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.28: Quarterly trade balance of rubber products
Export Import
10 000
10 200
10 400
10 600
10 800
11 000
11 200
11 400
11 600
11 800
201
5: Q
1
20
15
: Q
2
201
5:Q
3
201
5:Q
4
201
6 :Q
1
Figure 4.29: Number of formal employment: rubber
products
35
by 3,1% following a 6,5% growth recorded in the preceding quarter (see Figure 4.29). As a
result, 9 (nine) jobs were shed in the rubber products industry in the current period.
4.9 FURNITURE
The year-on-year and quarter-to-quarter producer price for domestic output of furniture and
other manufacturing grew by 3,4% and 1,0%, respectively during the first quarter of 2016 (see
Table 4.19).
Table 4.19: Producer price index for furniture and other manufacturing (Base 2012=100)
Indices % change between
2015: Q1 2015: Q4 2016: Q1 2015: Q1 and
2016: Q1
2015: Q4 and
2016: Q1
Domestic output
117,3 119,7 120,7 3,4 1,0
Source: Statistics SA (2016e)
Source: Statistics SA (2016d)
The quarter-to-quarter and year-on-year physical volume of production for furniture products
decelerated by 8,5% and 14,3% in the quarter under review, following contractions of 1,0%
and 2,4%, respectively as recorded in the fourth quarter of 2015.
50
60
70
80
90
100
110
120
130
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
20
12
: Q
2
201
2: Q
3
201
2: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
20
15
: Q
3
201
5: Q
4
201
6: Q
1
Ind
ex (
2010 =
100)
Figure 4.30: Seasonally adjusted physical volume of
production: furniture
36
Table 4.20: Utilisation and reasons for underutilisation of production capacity by large enterprises:
Furniture (percentage)
Period Utilisation Reasons for underutilisation
Total
underutilisati
on
Shortage of Insufficient
demand
Other
Raw
materials
Labour
Skilled Semi and
unskilled
2015: Q1 76,8 23,2 0,8 1,5 0,0 20,9 0,0
2015: Q4 88,9 11,1 0,8 0,0 1,5 7,5 1,3
2016: Q1 77,6 22,4 0,8 0,0 1,5 20,2 0,0
Utilisation of production capacity by large enterprises of furniture increased marginally year-
on-year, however, it decreased significantly as compared to the previous quarter (see Table
4.20). Insufficient demand and shortage of semi and unskilled labour remained the main
reasons for under-utilisation of production capacity.
Source: Statistics SA (2016d)
The quarter-to-quarter sales value of production for furniture decelerated by 6,7% following a
contraction of 0,3% recorded in the fourth quarter of 2015. Conversely, the year-on-year
value of sales contracted by 9,9% following a growth of 3,3% in the previous quarter (see
Figure 4.31).
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
20
12
: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.31: Seasonally adjusted value of sales (current
prices): furniture
37
Source: Quantec EasyData (2016)
The quarter-to-quarter import and export of furniture industry contracted by 8,8% and 28,6%
following growths of 1,8% and 12,2%, respectively as recorded in the previous quarter. On the
other hand, the year-on-year import and export of furniture industry moderated by 22,6%
and 7,0% following growths of 23,5% and 13,7%, respectively in the fourth quarter of 2015 (see
Figure 4.32). As a result, the trade deficit widened from R801,8 million in the previous quarter
to R1 005,6 million in the current period.
Source: Statistics SA (2016d)
The quarter-to-quarter formal employment in the furniture division decelerated by 0,8%
following a contraction of 1,6% in the previous quarter. On the other hand, the year-on-year
moderated by 2,5% following a growth of 7,4% recorded in the fourth quarter of 2015. As a
result, 252 jobs were shed in the furniture division during 2016: Q1 (see Figure 4.33).
0
500
1 000
1 500
2 000
2 500
201
1: Q
1
201
1: Q
2
201
1: Q
3
201
1: Q
4
201
2: Q
1
201
2: Q
2
201
2: Q
3
20
12
: Q
4
201
3: Q
1
201
3: Q
2
201
3: Q
3
201
3: Q
4
201
4: Q
1
201
4: Q
2
201
4: Q
3
201
4: Q
4
201
5: Q
1
201
5: Q
2
201
5: Q
3
201
5: Q
4
201
6: Q
1
R m
illio
n
Figure 4.32: Quarterly trade balance of furniture
Export Import
26 500
27 000
27 500
28 000
28 500
29 000
201
5: Q
1
201
5: Q
2
201
5:Q
3
201
5:Q
4
201
6 :Q
1
Figure 4.33: Number of formal employment: furniture
38
Table 4.21: Net balance of BER manufacturing survey: Furniture
2015: Q3 2015: Q4 2016: Q1 2016:Q2*
Domestic sales volumes -9 10 -18 -19
Export sales volumes -34 3 -3 -16
Production volumes -6 3 -26 -27
Domestic order volumes received -9 10 -23 -37
Export order volumes received -34 5 -21 -17
General business conditions -89 -48 -41 -53
Number of factory workers -9 -12 -21 -38
Fixed investment -36 -11 -11 -21
Business confidence 4 21 26
Expected volume of goods
imported in 12 months’ time 40 24 -34
Expected volume of goods
exported in 12 months’ time 45 -11 48
Expected real investment in
machinery and equipment in 12
months’ time -10 38 10
Expected business conditions in 12
months’ time -89 14 -31
*Expected Source: BER (2016)
Table 4.21 shows the manufacturing survey of the furniture division by BER during the first
quarter of 2016. The year-on-year outlook for the second quarter of 2016 is depressing for all
the variables.
5. CONCLUSION
The global economy showed a marginal increase in the period under review, while the South
African economy declined driven mainly by sharp decreases in the agriculture sector due to
unfavourably climatic conditions and the challenges faced by the mining sector. The
production volumes of most of the agro-processing sector showed a decline over the period.
The decline is primarily due to, among other factors, the strong backward linkages the agro-
processing sector has with the primary sector of agriculture. In spite of the decrease in
production volumes of most of the agro-processing divisions, the nominal value of sales
increased marginally during the first quarter of 2016.
As a result of an increase in import relative to export, the trade deficit of the agro processing
sector widened in the period under review. Furthermore, owing to an increase in import, the
agro-processing sector shed quite a number of jobs, with the exception of the food and
beverages division, which created 420 and 1 011 jobs respectively.
39
6. REFERENCES
BER (2016), Manufacturing Survey. Bureau for Economic Research, University of Stellenbosch.
FAO (1997), The State of Food and Agriculture. Rome: Food and Agriculture Organization.
IMF (2016), World Economic Outlook, Update. International Monetary Fund.
Quantec EasyData (2016), RSA International Trade. Accessed in September 2016.
Reserve Bank (2016), Quarterly Bulletin, September 2015. South African Reserve Bank.
Statistics SA (2016a), Quarterly Labour Force Survey, various issues. Statistics South Africa.
Statistics SA (2016b), Consumer Price Index, various issues. Statistics South Africa.
Statistics SA (2016c), Producer Price Index, various issues. Statistics South Africa.
Statistics SA (2016d), Manufacturing: Production and Sales, various issues. Statistics South
Africa.
Statistics SA (2016e), Manufacturing: Utilisation of Production Capacity by Large Enterprises.
Statistics South Africa.
Statistics SA (2016f), Quarterly Employment Statistics, various issues. Statistics South Africa.
UNIDO (2016), World Manufacturing Production, Statistics for Quarter 1, 2016, Statistics Unit,
United Nations Industrial Development Organisation.
40
NOTES:
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