PREFACE - nda.agric.za · Source: UNIDO (2015) and Quantec (2016) Table 2.3 shows the seasonally...

1

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.

2

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: [email protected]

This publication is also available on the internet at: http://www.daff.gov.za

mailto:[email protected]

http://www.daff.gov.za/

3

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.

4

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


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


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

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27.0

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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.

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Figure 3.2: Total CPI and PPI inflation

CPI PPI

10

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

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1

Figure 4.2: Number of formal employment: beverage and

tobacco products


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


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).


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

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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.


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


months’ time 11 20 25

Expected volume of goods exported in 12

months’ time -8 36 -7

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Figure 4.5: Number of formal employment: textiles

Preparation and spinning of textile fibres; weaving of textiles

Other textiles

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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)



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

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1: Q

3

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1: Q

4

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2: Q

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2: Q

2

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2: Q

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2: Q

4

20

13

: Q

1

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3: Q

2

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3: Q

3

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3: Q

4

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4: Q

1

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4: Q

2

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4: Q

3

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4: Q

4

20

15

: Q

1

201

5: Q

2

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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


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


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


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.


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

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2: Q

3

201

2: Q

4

201

3: Q

1

201

3: Q

2

201

3: Q

3

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3: Q

4

20

14

: Q

1

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4: Q

2

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4: Q

3

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4

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5: Q

2

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3

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5: Q

4

20

16

: Q

1

R m

illio

n


prices): wearing apparel

Wearing apparel Knitted, crocheted articles

17


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.


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

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1: Q

3

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1: Q

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2: Q

2

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2: Q

3

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2: Q

4

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3: Q

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201

3: Q

2

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3: Q

3

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3: Q

4

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4: Q

1

201

4: Q

2

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4: Q

3

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4: Q

4

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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




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


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


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).


Leather and leather products (percentage)


Total

under-

utilisation


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


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

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1: Q

2

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1: Q

3

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2: Q

1

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2: Q

2

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2: Q

3

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2: Q

4

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3: Q

1

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3: Q

2

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3: Q

3

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3: Q

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1

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4: Q

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4: Q

3

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4: Q

4

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5: Q

1

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5: Q

2

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5: Q

3

201

5: Q

4

201

6: Q

1

Ind

ex (

2010 =

100)


production: leather and leather products

20


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).


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

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1: Q

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4

20

12

: Q

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2: Q

2

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3

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3: Q

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5: Q

1

201

5: Q

2

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5: Q

3

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5: Q

4

201

6: Q

1

R m

illio

n


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

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1: Q

4

20

12

: Q

1

201

2: Q

2

201

2: Q

3

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2: Q

4

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3: Q

1

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3: Q

2

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3: Q

3

201

3: Q

4

201

4: Q

1

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4: Q

2

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4: Q

3

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4: Q

4

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5: Q

1

201

5: Q

2

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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.


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)


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


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


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).


Footwear (percentage)


Total

under-

utilisation


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


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

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2: Q

3

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2: Q

4

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3: Q

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3: Q

3

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3: Q

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1

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4: Q

2

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14

: Q

3

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14

: Q

4

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15

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1

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5: Q

2

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5: Q

3

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5: Q

4

201

6: Q

1

Ind

ex (

2010 =

100)


production: footwear

23


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).


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

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11

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2

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14

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4

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1

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5: Q

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6: Q

1

R m

illio

n


prices): footwear

0

500

1 000

1 500

2 000

2 500

201

1: Q

1

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1: Q

2

20

11

: Q

3

201

1: Q

4

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2: Q

1

201

2: Q

2

201

2: Q

3

201

2: Q

4

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3: Q

1

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3: Q

2

201

3: Q

3

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3: Q

4

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4: Q

1

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4: Q

2

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4: Q

3

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4: Q

4

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5: Q

1

201

5: Q

2

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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


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)


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


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


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


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


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

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1: Q

4

201

2: Q

1

201

2: Q

2

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2: Q

3

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2: Q

4

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1

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2

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3

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4

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5: Q

1

201

5: Q

2

201

5: Q

3

201

5: Q

4

201

6: Q

1

Ind

ex (

2010 =

100)


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.


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).


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

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1

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1

R m

illio

n


prices): wood and wood products


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).


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


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


28

2015: Q3 2015: Q4 2016: Q1 2016: Q2*


Expected volume of goods

imported in 12 months’ time -1 -98 -32


exported in 12 months’ time -90 -43 26

Expected real investment in

machinery and equipment in 12


Expected business conditions in 12

months’ time -100 -69 -76


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)



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


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)


Total

underutilisati

on


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)


production: paper and paper products

30


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).


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

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4: Q

3

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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


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


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


Number of factory workers 4 7 -2 0

Fixed investment 6 46 65 67


Expected volume of goods imported

in 12 months’ time 4 26 1

Expected volume of goods exported

in 12 months’ time 3 49 -15



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


months’ time 18 36 -12


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)



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)


production: rubber products


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).


Rubber products (percentage)


Total

underutilisati

on


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.


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


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.


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

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3: Q

3

201

3: Q

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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)


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



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)


production: furniture

36


Furniture (percentage)


Total

underutilisati

on


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.


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

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4: Q

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5: Q

1

201

5: Q

2

201

5: Q

3

201

5: Q

4

201

6: Q

1

R m

illio

n


prices): furniture

37


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.


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


Number of factory workers -9 -12 -21 -38

Fixed investment -36 -11 -11 -21



imported in 12 months’ time 40 24 -34


exported in 12 months’ time 45 -11 48



months’ time -10 38 10


months’ time -89 14 -31


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

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PREFACE - nda.agric.za · Source: UNIDO (2015) and Quantec (2016) Table 2.3 shows the seasonally...

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