Manufacturing survey points to 2016 job cuts, despite supportive rand
Forty per cent of the 72 respondents to the Manu-facturing Circle’s latest survey indicate that they could cut jobs in the coming year, despite the recent fall in the value of the rand, which could raise export competitiveness and bolster import substitution.
Nascence Advisory & Research economist Xhanti Payi, who compiled the fourth-quarter survey for the lobby group, says the employment outlook comes amid “rela- tively negative” sentiment, but stresses that only 20% warn that they could cut employment in the coming three months.
More than 50% of respondents, which collectively employ over 100 000 people, reported a deterioration in operating conditions during the final quarter of the year.
The firms surveyed – which traversed the full manufacturing milieu, from metals fabricators and packaging companies to food and pharmaceuticals producers – also expect a deterioration over the coming 12 months, with more than 60% expecting conditions to worsen during 2016.
This sentiment is in line with weak manufacturing production and capacity use in 2015, as well as the Barclays Purchasing Managers Index for South Africa, which came in at 43.5 in January, reflecting continued contraction.
But the Manufacturing Circle’s Mike Arnold, who is also CEO of Consol, stresses that there is “anecdotal evidence” that the export performance of the sector could improve, owing largely to the recent weakening in the South African currency.
“There is no doubt that we are seeing increased enquiries and actual exports taking place,” Arnold says, arguing, however, that there could be a two-quarter lag before these exports begin showing through in the survey results.
However, a number of manu- facturing input costs are also rising as a result of the weaker rand.
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