qquarterly economic review uarterly economic review oof ......production volume, sales, capacity...

Volume 2, number 2

September 2013

DIRECTORATE: AGRO-PROCESSING SUPPORT

Quarterly Economic Review Quarterly Economic Review

of the Agro-processing industry of the Agro-processing industry

in South Africa in South Africa

April to June 2013

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

Quarterly Economic Review of the Agro-Quarterly Economic Review of the Agro-

processing industry in processing industry in

South AfricaSouth Africa

Volume 2, number 2

September 2013

Directorate: Agro-processing Support

April to June 2013

DEPARTMENT OF AGRICULTURE, FORESTRY AND FISHERIES

2013

Published by Department of Agriculture, Forestry and Fisheries

Design and layout by Directorate: Communication Services

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

iii

Preface

The agro-processing industry is among the sectors identified by the Industrial Policy Action Plan (IPAP), the New Growth Path and the National Development Plan for its potential to spur growth and create 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 governmental departments, notably, the Department of Trade and Industry. One of the main purposes of the directorate is to provide timely and updated economic information regarding agro-processing, in order to monitor the performance of the sector and provide an insight into the effects of economic policies and exogenous factors. To achieve this purpose, the directorate has started to publish a regular quar-terly review of the agro-processing industry.

This publication Quarterly Economic Review of the Agro-processing Industry in South Africa: April to June 2013 evaluates the performance of the 11 divisions within agro-processing during the second quarter of 2013. These divisions, which are in line with the Standard Industrial Classification, are food products, beverages, tobacco, textiles, wearing apparel, leath-er 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, capac-ity utilisation by large enterprises, formal employment and trade balance. A sector specific outlook is also presented for selected divisions.

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

Herbital Maluleke

Acting Director: Agro-processing Support

Pretoria

Disclaimer: The Department of Agriculture, Forestry and Fisheries did everything to ensure the accuracy of the information reported in this

publication. The department will, however, not be liable for the results of action based on this publication.

v

Contents

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

1. Introduction .................................................................................................................................................... 1

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

3. State of the domestic economy .................................................................................................................... 3

4. The agro-processing industry .......................................................................................................................... 5

4.1 Food products ................................................................................................................................................ 5

4.2 Beverages ...................................................................................................................................................... 8

4.3 Tobacco ......................................................................................................................................................... 10

4.4 Textiles ............................................................................................................................................................. 11

4.5 Wearing apparel ............................................................................................................................................. 13

4.6 Leather and leather products ......................................................................................................................... 15

4.7 Footwear ........................................................................................................................................................ 17

4.8 Wood and wood products ............................................................................................................................. 18

4.9 Paper and paper products ............................................................................................................................. 20

4.10 Rubber products ............................................................................................................................................. 22

4.11 Furniture .......................................................................................................................................................... 24

5. Conclusion ..................................................................................................................................................... 26

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

Compiled by Dr Yemane Gebrehiwet with inputs from:

Deborah Makola, Kamohelo Mathibeli and Vhutshilo Nelwamondo

Sefala Building Office 233

503 Belvedere Street, Arcadia, South Africa

All correspondence can be addressed to:

The Director: Agro-processing Support

Private bag X416, Pretoria 0001, South Africa

Tel. +27 (12) 319 8457

Fax +27 (12) 319 8093

E-mail [email protected]

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

vii

Executive summary

The growth in the advanced and emerging economies accelerated the global economic growth from 2,2% in the previous quarter to 3,4% during the second quarter of 2013. Following the marginal growth of 0,9% during 2013: Q1, the domestic economy showed a moderate growth of 3,1% spurred by an impressive growth of manufacturing sector. Compared to the growth in industrialised and developing and emerging economies, South Africa’s agro-processing in-dustries performed well during the quarter. During the second quarter of 2013, the nominal effective exchange rate of the rand dropped further by 6,8% and the unemployment rate increased to 25,6%. The total consumer and producer price inflation during the quarter reached 5,6% and 5,4%, respectively. The producer price inflation of agro-processing products increased above the average inflation rate for food, wood and paper products.

Most of the divisions in the agro-processing industry improved production during the second quarter of 2013 compared to the previous quarter. Among the divisions with an increased volume of production are rubber products (12,1%), textiles (7,8%), footwear (4,3%), leather products (4,2%), paper products (3,8%), wood products (3,6%), food products (3,5%), furniture (3,3%) and wearing apparel (2,8%). Conversely, a 1,6% quarter-to-quarter production decline was observed in the beverages division.

Mainly because of the increase in production volume of most agro-processing products, the nominal value of sales of agro-processing (excluding tobacco sales) increased marginally by 3,0% compared to the previous quarter. Therefore, the total value of sales increased from R121 934 million in the preceding quarter to R125 646 million during the second quarter of 2013. The value of sales grew in the rubber (12,0%), leather and leather product (11,6%), knitted and crochet article category (9,8%), sawmilling and planing of wood (7,6%), other textile (7,4%), meat, fish, fruit (6,4%), furniture (4,5%), grain mill product (4,2%), wearing apparel (4,1%), dairy (4,0%), textile (6,1%), wood product (3,5%), paper and paper product (3,0%) and ‘’other food product’’ (1,7%) divisions. However, the value of sales contracted in beverages and foot-wear by 3% and 0,3%, respectively.

Because of a sizable increase in export compared to import, the trade deficit of agro-processing products decreased from R13 400 million in the previous quarter to R11 456 million during 2013: Q2. Among agro-processing products, the following showed a quarter-to-quarter export growth: Food products (28,8%), beverages (25,3%), leather (20,6%), rubber (18,8%), textiles (18,0%), furniture (12,5%), footwear (11,4%) and wearing apparel (8,8%), while tobacco products de-clined by 12,3%. Import declined for footwear (22,0%), wearing apparel (13,8%), wood and wood products (9,7%) and leather and leather products (1,5%). However, import of the following agro-processing products increased compared to the previous quarter: Furniture (10,3%), rubber products (10,8%), food (10%), beverages (15,6%), tobacco (16,2%), tex-tiles (10,4%), paper and paper products (1%).

Despite the increase in production and export, the agro-processing industry shed 5 555 formal jobs compared to the preceding quarter. Formal jobs were lost in furniture (8,5%: 3050), food (5,0%: 833), beverages and tobacco (4,1%:1630), wearing apparel (9,5%: 593), paper and paper products (1,3%: 399) and leather and leather products (2,2%: 96). Formal jobs, however, were created in footwear (5,1%: 476), wood and wood products (0,8%: 272), textiles (0,6%: 193) and rub-ber products (0,8%: 105). As a result, the total formal employment in the agro-processing industry decreased from 511 456 in the previous quarter to 505 881 in the second quarter of 2013.

1

1 Introduction

Global economic growth accelerated during the second quarter of 2013 triggered by the growth of both ad-vanced and emerging economies. The South African economy also grew moderately compared to the previous quarter as a result of a substantial recovery of the manufacturing sector. The primary sector, however, contracted and the tertiary sector moderated compared to the previous quarter. This quarterly review assesses the economic performance of the agro-processing industry, given a moderate global economic growth and slowed domestic economic activities regis-tered during the second quarter of 2013.

The quarterly review is organised as follows: section two and three summarise the global economy and the state of the domestic economy, respectively, during the second quarter of 2013. Section four provides the impact of the global and domestic economy on the eleven divisions of the agro-processing industry in brief. The review presented in this section assesses how the performance of the global and domestic economy during the quarter affected the producer price, production volume, sales, capacity utilisation, trade and employment of each division. In addition, an outlook for the third quarter of 2013 is presented for selected divisions. The outlook presents the expectation of domestic sales, export, invest-ment and employment, among others, for the next quarter compared to their levels a year ago.

2Overview of global economy

During the second quarter of 2013, the global economy accelerated to 3,4% from a 2,2% growth registered in the preceding quarter as a result of stronger growth registered in both advanced and emerging economies. Among the ad-vanced economies, the United States’ and United Kingdom’s economies grew by 2,5% and 2,9%, respectively, during the period. The economic recovery in the United States was driven by higher consumer demand and strong export growth. In the United Kingdom, however, the stronger growth of manufacturing, which was triggered by improved domestic and export demand, was the main driver. Furthermore, the Eurozone emerged from its long recession during the second quarter of 2013, spurred by the strong economic growth of France, Germany and Portugal.

The revised global economic outlook for 2013 and 2014 presented in Table 2.1 projected that the global economy would increase from 3,1% in 2013 to 3,8% in 2014. However, the registered growth is lower compared to its projections in April 2013 as a result of weaker domestic demand and slower growth in several key emerging markets and the prolonged recession in the Euro area (which is expected to remain in recession in 2013 as economic activity remains fairly weak). The economic growth in Sub-Saharan Africa is also projected to be weak, as its largest economies (Nigeria and South Africa) struggle with domestic problems and weaker external demand.

TABLE 2.1: Overview of the world economic outlook projections (percentage change)

Projections

2011 2012 2013 2014

World outputAdvanced economiesUSEuro areaJapanEmerging market and developing economiesChinaIndiaRussiaBrazilSub-Saharan AfricaSouth Africa

3,91,71,81,5

–0,66,29,36,34,32,75,43,5

3,11,22,2

–0,61,94,97,83,23,40,94,92,5

3,11,21,7

–0,62,05,07,85,62,52,55,12,0

3,82,12,70,91,25,47,76,33,33,25,92,9

Source: IMF (2013)

The global oil price is projected to drop to $100.09 in 2013 from $105.09 recorded in 2012 and recede further to reach $95.36 in 2014. The world trade volume of goods and services, however, is projected to increase from a growth rate of 3,1% in 2013 to 5,4% in 2014. The consumer price inflation in advanced economies is expected to accelerate in 2014 to 1,9% from the 1,5% projected in 2013. For emerging and developing economies, consumer price inflation is expect-ed to moderate to 5,5% during 2014 from the 6,0% projected in 2013.

2

Table 2.2 presents the world manufacturing output growth rate during the second quarter of 2013. World manufacturing output increased by 1,3% year-on-year despite the manufacturing output of industrialised economies, which decreased by 1,5%. However, the 7,1% growth of manufacturing output of developing and emerging industrial economies (which is mainly driven by China’s 9,9% growth rate) was the main contributor to the growth of world output during the period. While Africa’s manufactured output contracted by 1,4%, it showed a marginal growth in Latin America. The quarter-to-quarter growth of manufacturing output in all regions was positive, except for East Asia, Africa, Latin America and other develop-ing countries. During the second quarter of 2013, the South African manufacturing output performed better than the world average both year-on-year and compared to the previous quarter.

TABLE 2.2: Seasonally adjusted estimated growth rates of world manufacturing output, 2013: Q2

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

WorldIndustrialised economiesNorth AmericaEuropeEast AsiaDeveloping and emerging industrial economies(by development group)ChinaEmerging industrial economiesLeast developed countriesOther developing countriesDeveloping and emerging industrial economies (by region)AfricaAsia and PacificLatin AmericaOthers South Africa

100,067,722,424,717,232,3

15,313,8

0,52,7

32,31,5

21,75,83,3

--

3,20,11,20,0

–1,19,6

15,60,15,5

–2,79,6

–0,413,2–0,20,33.3

1,3–1,52,2

-2,5–5,17,1

9,92,18,2

-1,47,1

–1,59,30,72,13,4

Source: UNIDO (2013) and Quantec (2013)

TABLE 2.3: Seasonally adjusted estimated growth rates of output by manufacturing sector, 2013: Q2 (in % compared to the same period of the previous year)

Developing and emerging industrial-ised economies

Industrialised econo-mies

South Africa World

Food and beveragesTextilesWearing apparel, furLeather, leather products and footwear

Wood products Paper and paper productsFurniture and other manufacturing

7,56,38,97,2

9,38,27,1

–0,4–1,4–7,4–0,5

2,4–1,4–0,2

3,8–1,06,56,9 (leather)4,3 (footwear)0,81,6

–13,3

2,94,03,74,6

4,31,62,2


The seasonally adjusted year-on-year growth rate of selected agro-processing industries during 2013: Q2 is presented in Table 2.3. During the period, South Africa’s wearing apparel, followed by food and beverages grew above the world aver-age. Compared to the industrialised economies, South Africa’s agro-processing industry performed above average, ex-cept for the wood products division. However, the performance of the agro-processing industry is lower compared to the developing and emerging industrialised economies.

TABLE 2.4: Seasonally adjusted estimated growth rates of output by manufacturing sector, 2013: Q2 (in % compared to 2012: Q2)



South Africa World

Food and beveragesTextilesWearing apparel, furLeather, leather products and footwear

1,3–2,1–2,1–0,9

–0,40,0

–1,90,2

1,63,41,36,0 (leather)9,5 (footwear)

0,4–1,5–2,1–0,6

3



South Africa World

Wood products Paper and paper productsFurniture and other manufacturing

–3,02,44,1

–0,60,1

–0,3

1,34,1

–2,9

–1,40,91,9


Table 2.4 presents the quarter-to-quarter seasonally adjusted growth rates of the agro-processing industries during the second quarter of 2013. The growth of South Africa’s agro-processing subsector was higher compared to the world, in-dustrialised economies and developing and emerging industrialised economies in all agro-processing industries, except for furniture and other manufacturing.

3 State of the domestic economy

During 2013: Q2, the growth of South Africa’s economy increased from a 0,9% in the previous quarter to 3,0%. Excluding the volatility of the primary sector, the economy grew substantially by 4,0%, the highest quarterly growth since 2011: Q2 (see Table 3.1). The primary sector contracted substantially by 5,0% following an 8,1% growth in the previous quarter as a result of contraction of production in both the mining sector and the agricultural sector. The agricultural sec-tor contracted by 3,7%, resulting from a contraction in field crop production owing to dry weather conditions in most maize-producing areas in South Africa. Similarly, the mining sector contracted by 5,6% following an impressive 14,6% growth recorded in the previous quarter, as a result of reduced production of platinum and diamonds.

TABLE 3.1: South African economic growth rate (percentage change at seasonally adjusted annualised rates)

Sector

2011 2012 2013

Q1 Q2 Q3 Q4 year Q1 Q2 Q3 Q4 year Q1 Q2

Primary sectorAgricultureMiningSecondary sectorManufacturing Tertiary sectorNon-primary sector

–5,5–4,7–5,910,313,1

3,95,5

–4,2-9,2-2,1-3,2-4,34,12,3

–14,2–5,8

–17,4-0,5–0,34,53,2

–2,1–3,7–1,43,64,53,53,5

0,2-0,10,32,93,63,83,6

–9,54,8

-15,15,56,43,13,7

24,09,3

30,9-0,5-0,82,31,6

–7,17,4

–12,71,51,21,91,8

–3,710,0–9,33,65,02,42,7

–2,22,3

-4,02,12,43,02,8

8,1–4,914,6–6,2–7,92,40,2

–5,0–3,7–5,69,3

11,52,34,0

Total 4,8 1,9 1,9 3,3 3,5 2,5 3,4 1,2 2,4 2,5 0,9 3,0

Source: Reserve Bank (2013)

During the second quarter of 2013, the manufacturing sector rebounded by 11,5%, following a 7,9% contraction in the previous quarter. Substantial growth was registered in the production of basic iron and steel, non-ferrous metal products and machinery; motor vehicles, parts and accessories and other transport equipment; and textiles, clothing, leather and footwear. On the other hand, production of petroleum, chemical products, rubber and plastic products continued to decline during the period. Electricity, gas and the water sector rebounded by 5,3% during the second quarter of 2013, following a 3,0% decline in the previous quarter. This change was reflected as a result of increased activities in the man-ufacturing and mining sector. The construction sector’s real output increased by 1,2%, following an 0,9% growth during the period, mainly as a result of increased activity in the residential and non-residential building segments of the construc-tion sector.

The tertiary sector’s economic growth moderated to 2,3% during the second quarter of 2013 compared to the previous quarter‘s growth of 2,4%. The trade sector increased by 3,2% during the period, following a 1,9% growth in the previous quarter. The transport, storage and communication moderated to 1,6%, following a 2,2% growth in the previous quarter and the finance, insurance, real estate and business service sectors’ output accelerated to 3,5%, following a 3,3% growth in the previous quarter. Growth in the real value added by general government, however, moderated from 1,9% in the previous quarter to 0,3% in the quarter under review as a result of the marginal decline in employment.

The real gross domestic expenditure moderated to 2,7%, following a 3,5% growth in the preceding quarter. The real gross domestic expenditure moderation resulted from slower growth in real final consumption expenditure by the general gov-

TABLE 2.4: Seasonally adjusted estimated growth rates of output by manufacturing sector, 2013: Q2 (in % compared to 2012: Q2) (Cont.)

4

ernment (from 3,0% to 2,1%) alongside a slower accumulation of real inventories (from 4,0 to 2,7%). The growth in the real final consumption expenditure by households, however, accelerated marginally (from 2,3% to 2,5%) during 2013: Q2.

The unemployment rate increased by 0,4 percentage points from 25,2% in the previous quarter to 25,6% in 2013: Q2 as the labour force increased by 222 000 between Q1:2013 and Q2:2013. During the quarter employ-ment decreased in the following sectors: Agri-culture (26 000), community and social services (22 000), manufacturing (18 000) pri-vate households (12 000), utilities (2 000), and private households (12 000). However, em-ployment was created in the construction (62 000), trade (52 000), finance and other business services (37 000), transport (19 000) and, mining (9 000) sectors.

During the second quarter of 2013, the pro-ducer price inflation for final manufactured goods moderated marginally to 5,4% from 5,6% in the previous quarter. Similarly, the con-sumer price inflation moderated from 5,8% in the previous quarter to 5,6% during the period under review. While consumer food price infla-tion increased moderately from 5,8% in the previous quarter to 6,4% during 2013: Q2, both consumer prices for processed and un-processed food products showed a 7,2% and 5,0% respectively.

TABLE 3.2: Exchange rates of the rand (percentage change)

Currency31 Mar. 2012 to30 Jun. 2012

30 Jun. 2012 to 31 Sep. 2012

30 Sep. 2012 to 31 Dec. 2012

31 Dec 2012 to 31 Mar 2013

31 Mar. 2013 to31Jun. 2013

Weighted average1

EuroUS dollarChinese yuanBritish poundJapanese yen

–4,8–1,9–7,5–6,7–5,3

–10,5

–1,3–1,9 1,0–0,1–2,7–1,4

–2,8–5,0–3,1

–03,9–2,77,6

–5,7–5,5–8,3–8,5–2,30,3

–6,8–8,9–7,2–8,3–7,6–2,5

Source: Reserve Bank (2013)

The percentage change of exchange rates of the rand, during the second quarter of 2013 is presented in Table 3.2. The nominal effective exchange rate of the rand dropped by 6,8%, following a decline of 5,7% in the previous quarter as a result of weak economic growth, lower international export commodity prices, and wide fiscal and current account defi-cits (Reserve Bank, 2013). During the first half of the 2013, the real effective exchange rate of the rand declined by 8,8%, improving the external price competitiveness of domestic exporters.

Source: Statistics SA (2013a)

Source: Statistics SA (2013b, 2013c)

1 The Reserve Bank calculates the nominal effective exchange rate of the rand based on trade in and consumption of manufactured goods between South Africa and its most important trading partners. It is calculated against 15 currencies. The weights of the five major currencies are: Euro (0,34), US dollar (0,14), Chinese yuan (0,12), British pound (0,10), Japanese yen (0,10).

5

4 The agro-processing industry

The FAO (1997) defines agro-processing as a subset of manufacturing that processes raw materials and interme-diate products derived from the agricultural sector. Therefore, the agro-processing industry basically transforms products originating from agriculture, forestry and fisheries. According to the Standard Industrial Classification, the agro-processing industry comprises the following 11 divisions: food products, beverages, tobacco, textiles, wearing apparel, leather and leather products, footwear, paper and paper products, wood and wood products, rubber and furniture. This section re-views the economic performance of these divisions during the second quarter of 2013 given the global and domestic economic situation during the period.

4.1 FOOD PRODUCTS

The producer price of processed food products for domestic output accelerated to 6,8% in the second quarter of 2013, following a 6.1% growth in the previous quarter. This can be attributed to an increase of ‘’other food products’’ (from 4,9% to 7,9%) and meat and meat products (from 5,3% to 8,1%). Among the food categories, fats and oils, showed the high-est year-on-year growth rate of 11,4%, while the sugar price contracted by 0,9%. The quarter-to-quarter producer price for “other food products”, dairy products and fruit and vegetables increased by 3,0%, 2,0% and 1,9% respectively. As a result the quarter-to-quarter producer price of processed food for domestic output was modest at 1,8% (see Table 4.1).

TABLE 4.1: Producer price index for domestic output of South African processed food products (Base 2012=100)

Food product

Indices % change between

2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2

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

98,9–

101,496,7

100,597,796,098,9

–99,7

103,7–

104,1107,8101,4103,5103,9103,6

–100,2

105,6–

106,2107,7103,3102,7103,8106,7

–98,8

6,8–

4,711,4

2,85,18,17,9

––0,9

1,8–

2,0–0,11,9

–0,8–0,13,0

––1,4

Source: Statistics SA (2013c)

Table 4.2 shows that the producer price for exported food processed products increased from a contraction of 2,2% year-on-year in the previous quarter to 0,5% during the second quarter of 2013 (see Table 4.2). This can be attributed to the rise in producer prices of grain mill products (from –3,6% to 5,7%), meat and meat products (from –0,5% to 2,9%) and “other food products” (from 1,4% to 2,1%). The quarter-to-quarter producer price of exported food products de-clined by 0,6%; however, it showed the highest growth rate of 8,2% for grain mill products.

TABLE 4.2: Producer price index for exported commodities of South African processed food (Base 2000=100)

Food product


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2

Food (total)Dairy productsFats and oilsFruit and vegetable productsGrain mill products and bakery products

Meat and meat products

Other food products

Prepared and preserved fish

Sugar

150,1143,1199,4147,3237,0117,6175,6156,2132,8

151,8143,1199,4153,4231,4120,4177,7158,0133,0

151,0143,1199,4158,0250,3121,0179,2157,0130,0

0,50,00,06,95,72,92,10,4

–2,3

0,60,00,02,78,20,50,8

–0,5–2,4


6

TABLE 4.3: Producer price index for imported commodities of South African processed food (Base 2000=100)

Food product


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2

Food (total)

Coffee and tea

Dairy products

Fats and oils

Fruit and vegetable products

Grain mill products and bakery products

Meat and meat products

Other food products

Prepared and preserved fish

Sugar

180,6

140,1

182,0

224,0

156,0

169,0

199,0

131,5

121,1

175,0

183,0

140,1

183,6

223,2

156,0

172,2

208,0

134,0

121,1

175,0

187,0

140,0

184,1

223,8

156,0

174,0

225,2

136,0

121,8

175,0

3,5

0,0

1,2

–0,1

0,0

3,0

13,2

3,3

0,6

0,6

2,2

0,0

0,3

0,3

0,0

1,0

8,3

1,3

0,6

0,0


The producer price index for imported commodities of South African processed food presented in Table 4.3 shows that it increased by 3,5% year-on-year during 2013: Q2. Among the food categories, meat products showed the highest year-on-year growth (13,2%) followed by “other food products” (3,3%) and grain mill products (3%). Compared to the previous quarter, the producer price of imported food products increased by 2,2%. The quarter-to-quarter price growth is driven mainly by meat and meat products (8,3%).

A physical volume of production by the food products division is presented in Figure 4.1. The quarter-on-quarter physical volume of produc-tion of grain mill and bakery products, meat, fish, fruit etc., dairy products and ‘’other food products’’ increased by 5,3%, 4,4%, 2,3% and 1,4% respectively. Except for dairy products, which contracted by 0,8% year-on-year, vol-ume of production of ‘’other food products’’, grain mill and bakery products and meat, fish and fruit increased by 7,2%, 5,5% and 1,5% respectively.

TABLE 4.4: Utilisation and reasons for underutilisation of production capacity by large enterprises: Food products (percentage)

Period Utilisation

Reasons for underutilisation

Total under-utilisation

Shortage of

Insufficient demand

OtherRaw materials

Labour

Skilled Semi and unskilled

2012: Q22013: Q12013: Q2

83,477,682,7

16,622,417,3

2,82,52,7

1,61,71,5

0,10,20,2

10,111,010,3

2,07,12,7

Source: Statistics SA (2013e)

The utilisation and reason for underutilsation of production capacity by large enterprises of food products showed a mar-ginal decrease year-on-year and a moderate increase compared to the previous quarter (see Table 4.4). This is consist-ent with the increase in production volumes of most categories in the food division. Insufficient demand remained the main reason of undeutilisation, followed by shortage of raw materials and other reasons (such as lower productivity, sea-sonal factors and downtime owing to maintenance).

Source: Statistics SA (2013d)

7

The year-on-year growth rate of seasonally ad-justed value of sales for grain mill products, meat and meat products, dairy and other food products increased by 12,2%, 8,8%, 7,8% and 6,0%, respectively. Similarly, the quarter-to-quarter value of sales of meat and meat products, grain mill products, dairy, and “other food products” grew by 6,4%, 4,1%, 4,0% and 1,7% respectively. The increase in the production volumes of most food catego-ries was the main cause for the rise in the value of sales during the period (see Figure 4.2).

Figure 4.3 shows the quarterly trade balance of processed food products. Both exports and im-ports of food products increased by 21,3% and 13,0% year-on-year, respectively during the second quarter of 2013. Similarly, exports of processed food products increased by 25,3% and imports grew by 10,0% compared to the previous quarter. As a result the trade deficit decreased from R4 089 million in the previous quarter to R3 760 million during 2013: Q2.

Figure 4.4 shows the formal employment in the food products industry. Having contracted by 1,2% year-on-year in the previous quarter, em-ployment in the food division grew by 1,4% during the second quarter of 2013. Compared to the previous quarter, formal employment decreased by 0,5% mainly as a result of a contraction in formal employment growth in meat, fish, fruit etc. by 5%. Formal employ-ment in the dairy, grain mill products and “other food products’’, however, increased by 3,0%, 1,5% and 1,4%, respectively. As a result, the formal employment declined from 173 106 in the previous quarter to 172 273 during 2013: Q2.

TABLE 4.5: Net balance2 of BER manufacturing survey: food products

2012: Q4 2013: Q1 2013: Q2 2012: Q3*

Domestic sales volumesExport sales volumesProduction volumesDomestic order volumes receivedExport order volumes receivedGeneral business condition

46–33334433

–39

10–27131912

–31

462

234217

5

373050301011


Source: Quantec EasyData (2013)

Source: Statistics SA (2013f)

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

8

2012: Q4 2013: Q1 2013: Q2 2012: Q3*

Number of factory workersFixed investmentBusiness confidence3

Expected volume of goods imported in 12 months’ timeExpected volume of goods exported in 12 months’ timeExpected real investment in machinery and equipment in 12 months’ timeExpected business condition in 12 months’ time

–512421721

6–5

79

38–94724

9

141351–32316

8

–1721

*ExpectedSource: BER (2013)

A survey of food manufacturing by the Bureau for Economic Research (BER) is presented in Table 4.5. The survey shows that all variables were expected to increase year-on-year during the 2013: Q2. This is confirmed by the data presented above, except for employment that showed a decline. The outlook for the third quarter of 2013 remains positive for all variables except for employment.

4.2. BEVERAGES

The year-on-year producer price of beverages for domestic outputs increased by 4,7% during 2013: Q2. Similarly, the producer price for exported beverages increased by 4,2% driven mainly by an increase in the alcoholic beverages by 4,8%. The imported prices of beverages also grew by 2,5% prompted by the increase in the prices of alcoholic bever-ages by 3,6% growth in 2013: Q2 (see Table 4.6). Compared to the previous quarter, the PPI for domestic output, ex-ported and imported beverages increased by 2,2%, 3,4% and 2,5%, respectively.

TABLE 4.6: Producer price index for beverages (Base 2000=100)

Indices % change

2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2

Domestic output (2012=100)

Beverages (total) 100,7 103,1 103,1 4,7 2,2

Exported commodities

Beverages (total)Alcoholic beveragesNon–alcoholic beverages

125,0125,0110,0

126,0126,0121,0

130,3131,0121,0

4,24,80,0

3,44,00,0

Imported commodities

Beverages (total)Alcoholic beveragesNon–alcoholic beverages

158,0163,2110,0

158,0163,2110,0

162,0169,0110,0

2,53,60,0

2,53,60,0


Figure 4.5 above presents the seasonally ad-justed physical volume of production for bev-erages. During 2013: Q2, the volume of pro d uc tion for beverages increased by 3,5% year-to-year and contracted by 1,6% com-pared to the previous quarter.

TABLE 4.5: Net balance2 of BER manufacturing survey: food products (Cont.)


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

9

TABLE 4.7: Utilisation and reasons for underutilisation of production capacity by large enterprises: Beverages division (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

81,681,781,2

18,418,318,8

1,92,41,7

2,11,92,1

0,10,30,1

10,09,5

10,2

4,44,34,7


Table 4.7 shows that the year-on-year and quarter-to-quarter utilisation of production capacity showed a marginal de-cline. Among the reasons of underutilisation, insufficient demand remained the key followed by other reasons (such as lower productivity, seasonal factors and downtime owing to maintenance) and shortage of skilled labour.

Figure 4.6 shows the seasonal adjusted value of sales of beverages. Following the year-on-year increase in volumes of production, the value of sales of beverages increased by 6,3% year-on-year during the second quarter of 2013. However, the quarter-to-quarter sales of bever-ages contracted by 3,1% following the contrac-tion in production.

The export and import of beverages increased by 33,8% and 29,7%, year-on-year, respectively, during the 2013: Q2. Compared to the previous quarter, both exports and imports of beverages grew by by 28,7% and 15,6%, respectively. The substantial growth of exports resulted in the trade surplus of the beverages industry being in-creased from R1 307 million in the previous quar ter to R1 817 million during the period (see Figure 4.7).

Figure 4.8 above shows the formal employment in the beverages and tobacco division. Following the production trend, formal employment in-creased by 4,0% year-on-year during the peri-od; however, it contracted by 4,2% compared to the previous quarter. As a result, the total for-mal employment in the division decreased from 39 119 in the previous quarter to 37 489 during 2013: Q2.


Source: Statistics SA (2013)


10

TABLE 4.8: Net balance of BER manufacturing survey: Beverages

2012: Q4 2013: Q1 2013: Q2* 2012: Q3

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

7569967569

–72-6716

8816890

99

9484949585

–852

943

852

83

–11

909

9388

9–86–15801087

–8182

–75

908

9382

8–88–2180

*Expected–5

Source: BER (2013)

The survey of the beverages division by BER shows that year-on-year growth of domestic sales, export sales volumes and production volumes could be expected during the period. However, the number of employment opportunities was ex-pected to contract. The actual data also supported the expectation, except employment, that showed a year-on-year increase. The outlook for 2012: Q3 is positive for all the variables, except employment.

4.3 TOBACCO

During 2013: Q2, the year-on-year producer price of tobacco products for domestic output was 5,4%. While the year-on-year producer price for imported tobacco products remained unchanged, it grew marginally by 1,3% for the exported tobacco products. The quarter-to-quarter-producer price for imported and exported tobacco products showed no change; however, it increased by 2,4% for domestic output (see Table 4.9).

TABLE 4.9: Producer price index for tobacco products (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


99,4 102,3 104,8 5,4 2,4


181,0 183,3 183,3 1,3 0,0


123,0 123,0 123,0 0,0 0,0


Figure 4.9 above shows the quarterly trade bal-ance for beverages. While exports of tobacco contracted by 32,2% year-on-year, imports grew by 28,3%. Similarly, exports decreased by 12,3% and imports increased by 16,2% com-pared to the previous quarter. As a result, the trade balance of beverages decreased from a surplus of R241 million in the previous quarter to R173 million in 2012: Q2.


11

4.4 TEXTILES

The producer price index for domestic output of textiles accelerated to 5,1% year-on-year, following a 4,1% growth in the previous quarter. The producer price for exported textile and made up of goods also accelerated by 13,3% year-on-year during the period, following the 3,8% growth it registered in the previous quarter. The PPI for imported textiles and made-up goods, however, increased marginally by 0,7% year-on-year (see Table 4.10). Compared to the previous quarter, the PPI for exported textiles and made-up goods showed the highest growth compared to the PPI for domestic output and im-ported textiles.

TABLE 4.10: Producer price index for textiles (Base 2000=100)

Indices % change

2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


Textiles 99,4 103,4 104,5 5,1 1,1


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

192,6125,3325,0

197,4128,2339,2

218,2142,7350,8

13,313,9

7,9

10,511,3

3,4


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

121,9140,4112,4

122,2141,2112,4

122,8142,3112,8

0,71,40,4

0,50,80,4

Source: Statistics SA (2013a)

During 2013: Q2, the seasonally adjusted physi-cal volume of production for textiles decreased by 5,1% year-on-year, following a 10,0% con-traction in the previous quarter. The volume of production for other textiles, however, increased by 5,4% year-on-year after contracting by 8,8% in the previous quarter. Com pared to the previ-ous quarter, the volume of production for textiles contracted marginally by 0,2%, while for other textiles it increased by 12,1% (see Figure 4.10).

TABLE 4.11: Utilisation and reasons for underutilisation of production capacity by large enterprises: Textiles (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

69,771,670,0

30,328,430,0

1,01,61,6

0,30,60,3

0,10,20,1

26,324,125,4

2,51,92,6


Table 4.11 shows that the utilisation of production capacity by large enterprises in the textiles division increased margin-ally year-on-year and decreased slightly compared to the previous quarter. The year-on-year increase in the utilisation of production capacity is not reflected by the volume of production in the division. Insufficient demand continued to be the main reason for underutilisation of production capacity in the division, followed by other reasons (such as lower productiv-ity, seasonal factors and downtime owing to maintenance).


12

The value of sales for the textiles division increased by 17,2% year-on-year in 2013: Q2, following the 1,1% growth it registered in 2013: Q1. After shrinking by 2,4% year-on-year in the previous quarter, the value of sales for other textile products increased by 5,5% during the period. Compared to the previous quarter, the values of sales for textiles and other textile products increased by 6,0% and 7,4%, respectively, during 2013: Q2 (see Figure 4.11).

During the second quarter of 2013, the export of tex-tiles accelerated substantially by 28,3% year-on-year from the 18,1% growth it registered in the previous quarter. Similarly, the import of textiles accelerated from the 5,3% year-on-year it registered in the previous quarter to 20,7% during 2013: Q2. Compared to the previous quarter, both exports and imports of textiles showed an increase of 18,0% and 10,4%, respective-ly, during the period. The increase in exports of textiles, however, had little impact on trade balance as it in-creased from the R1 644,2 million deficit in the previ-ous quarter to a R1 765,6 million deficit during the second quarter of 2013 (see Figure 4.12).

Despite showing a year-on-year increase in the vol-ume of production and export of textiles, the formal employment decreased by 1,2% year-on-year. How-ever, it increased marginally by 0,6% compared to the previous quarter . The formal employment in the prep-aration and spinning of textiles fibres and other textiles contracted by 2,9% and 0,7%, year-on-year, respec-tively. Compared to the previous quarter, the formal employment in the preparation and spinning of textile fibres contracted by 3,6% while it grew by 2,1% for other textiles (see Figure 4.13). As a result, the total for-mal employment in the textile division increased from 31 487 in the previous quarter to 31 680 during the 2013: Q2.

TABLE 4.12: Net balance of the BER manufacturing survey: Textiles

2012: Q4 2013: Q1 2013: Q2 2012: Q3*

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

–24–1

–45–21–35–54–24

–53

2538

–43–24

–22–27

–4–22–27–36

9–1543–5

–16–44–35

–8–32

–2–13–46–42–10–11

741

–149

–61

–3–31–15–15–20–29–21–21





13

The manufacturing survey by BER for the textiles division depicts that a year-on-year decrease of all variables was ex-pected during 2013: Q2 (see Table 4.12). The actual data, however, confirm that sales and exports increased while pro-duction and employment decreased during 2013: Q2. In addition, business confidence shows that business conditions were unsatisfactory for the majority during the period. The outlook for the third quarter of 2013 is bleak for all variables.

4.5 WEARING APPAREL

Table 4.13 shows that during the second quarter of 2013, the producer price of wearing apparel for domestic output in-creased by 5,1% year-on-year. The producer price for exported wearing apparel and other wearing apparel also rose by 1,0% and 2,8%, respectively, while for exported knitted or crocheted fabrics it remained unchanged. Compared to the previous quarter, the PPI of domestic output, exported wearing apparel and other wearing apparel increased by 1,1%, 0,7% and 2,0%, respectively. The year-on-year producer price for imported wearing apparel, knitted or crocheted fabrics and other wearing apparel also increased marginally by 1,2%, 0,6% and 2,3%, respectively. Compared to the previous quarter, the PPI for imported wearing apparel and other wearing apparel increased modestly by 0,4% and 1,6%, respec-tively, while for knitted or crocheted fabrics it decreased marginally by 0,1%.

TABLE 4.13: Producer price index for wearing apparel (Base 2000=100)

Indices % change

2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


Textiles 99,4 103,4 104,5 5,1 1,1


Wearing apparelKnitted or crocheted fabricsOther wearing apparel

115,7118,3130,7

116,0118,3131,7

116,8118,3134,4

1,00,02,8

0,70,02,0


Wearing apparelKnitted or crocheted fabricsOther wearing apparel

124,7124,4124,7

127,5125,4125,6

126,2125,3127,6

1,20,62,3

0,4 –0,1

1,6


The year-on-year seasonally adjusted volume of production of knitted or crocheted articles re-bounded by 6,4% during 2013: Q2, following a 21,2% contraction in the previous quarter (see Figure 4.14). The year-on-year volume of pro-duction of wearing apparel moderated to 7,9% from the 9,9% growth it recorded in the previous quarter. The quarter-to-quarter volume of pro-duction for knitted or crocheted articles in-creased by 5,2% while for wearing apparel it increased by 2,6% during 2013: Q2.

TABLE 4.14: Utilisation and reasons for underutilisation of production capacity by large enterprises: Wearing apparel (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

77,280,981,5

22,819,118,5

1,51,31,6

1,20,40,4

1,00,81,1

15,013,112,0

4,13,63,4



14

Following the increase in volume of production, the utilisation of production capacity by large enterprises of the wearing apparel division increased by 4,3 percentage points year-on-year and showed a marginal quarter-to-quarter increase. Insufficient demand remained the main reason behind low capacity utilisation, followed by other reasons (such as lower productivity, seasonal factors and downtime owing to maintenance) (see Table 4.14).

During 2013: Q2, the seasonally adjusted value of sales of knitted or crocheted articles rebound-ed significantly by 14,5% year-on-year, following a 19,0% contraction in the previous quarter. The year-on-year value of sales of wearing apparel moderated to 10,6% from the growth of 11,4% registered in the previous quarter (see Figure 4.15). During the period, the quarter-on-quarter value of sales of wearing apparel and knitted or crocheted articles increased by 4,1% and 9,8%, respectively. The total year-on-year value of sales of aggregated wearing apparel (wearing apparel and knitted or crocheted articles) re-bounded by 11,0% following the 7,5% contrac-tion it registered in the previous quarter.

During 2013: Q2, the export of wearing apparel increased by 17,2%, year-on-year, following the considerable 41,0% growth it registered in the previous quarter. Imports, on the other hand, grew significantly by 37,1%, year-on-year, from a 17,3% growth it showed in the preceding quarter. Compared to the previous quarter, ex-port of wearing apparel increased by 8,8% and import decreased by 13,8%. As a result, the trade deficit of wearing apparel narrowed from R4 061,0 million in the previous quarter to R3 448,1 million during 2013: Q2.

Despite the increase in the volume of produc-tion, formal employment in the wearing appar-el division contracted by 1,2%, year-on-year during 2013: Q2. Similarly the quarter-on-quar-ter employment growth declined by 9,5%. From the two categories of the division, formal employment contracted in the knitted and cro-cheted fabrics and articles by 1,6% year-on-year; however, it increased by 2,4% compared to the previous quarter. The year-on-year formal employment in the wearing apparel, except the fur category, contracted by 10,3% year-on-year and decreased by 1,1% compared to the previous quarter (see Figure 4.17). As a result, the total number of formal employment oppor-tunities in the wearing apparel division de-creased from 47 995 in the previous quarter to 47 402 during 2013: Q2.




15

TABLE 4.15: Net balance of the BER manufacturing survey: Clothing

2012: Q4 2013: Q1 2013: Q2 2012: Q3*


–48–50–30

8–53–58–34

–460

–25–1021

–25

3151553152

–40374258

–335357

–29

3668

1–559

–45–3971

9467246

–47

4070463961–55

80


The year-on-year increase in domestic production, sales and exports was expected of the wearing apparel manufactur-ing, while employment was expected to decrease year-on-year during the second quarter of 2013. The actual data are consistent with the expectation. The outlook for the division for the third quarter of 2013 reveals that most variables are expected to show a positive year-on-year growth.

4.6 LEATHER AND LEATHER PRODUCTS

During the second quarter of 2013, the producer price of leather and leather products for domestic output increased by 18,6% year-on-year. The producer price of imported leather products also increased by 2,0% year-on-year; however, it remained unchanged for exported leather products (see Table 4.16). Compared to the previous quarter, the producer price of leather and leather products for domestic output and imported leather products increased by 5,9% and 1,4%, respectively. However, it remained unchanged for exported leather products.

TABLE 4.16: Producer price index for leather and leather products (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


98,1 109,9 116,4 18,6 5,9


98,3 98,3 98,3 0,0 0,0


146,5 147,5 149,5 2,0 1,4


The volume of production for leather and leather products during 2013: Q2 rebounded by a 3,5% year-on-year growth, following a 2,3% contrac-tion in the previous quarter (see Figure 4.18). The quarter-to-quarter volume of production also re-bounded by 4,2% after showing a marginal con-traction in the previous quarter.


16

TABLE 4.17: Utilisation and reasons for underutilisation of production capacity by large enterprises: Leather and leather products (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

71,363,667,9

28,736,432,1

2,84,33,7

0,20,80,2

0,60,60,9

19,626,722,5

5,54,14,8


During 2013: Q2, the utilisation of production capacity by large enterprises of leather and leather products declined by 3,4 percentage points year-on-year; however, it increased by 4,3 percentage points compared to the previous quarter. The main reason behind low capacity utilisation was insufficient demand for leather products, followed by of other rea-sons (such as downtime because of maintenance, seasonal factors and lower productivity) and a shortage of raw ma-terials (see Table 4.17).

The seasonally adjusted value of sales of leather and leather products accelerated considerably from the 2,4% year-on-year growth in the previous quarter to 12,1% during the second quarter of 2013. The value of sales also rebounded by 11,6%, after showing a 7,4% contraction in the previous quarter (see Figure 4.19). The main cause for the increase in the value of sales was the rebound in the volume of production.

Leather and leather export products accelerated by 54,3% year-on-year after showing a 37,7% year-on-year growth in the previous quarter. Following an in-crease of 26,0% year-on-year in the previous quarter, import of leather products also accelerated by 29,6% during the period. Compared to the previous quarter, exports of leather products increased by 20,6% while imports contracted by 1,5%. As a result, the trade deficit of leather and leather products decreased from R372,3 million in the previous quarter to R301,3 million during the second quarter of 2013 (see Figure 4.20).

Despite the growth in the volume of production and export of leather and leather products, formal em-ployment in the division declined by 2,2% compared to the previous quarter and contracted by 14,7% year-on-year (see Figure 4.21). As a result, the total number of formal employment opportunities in the leather and leather products division decreased from 4 296 in the previous quarter to 4 200 during the sec-ond quarter of 2013.




17

4.7 FOOTWEAR

During the second quarter of 2013, the producer price of footwear for domestic output moderated to 1,2% year-on-year, following the 5% increase in the previous quarter. The year-on-year producer price of imported footwear increased by 2,8% while for exported footwear it remained unchanged. Compared to the previous quarter, the producer price for domestic output decreased by 1,6%, while it increased by 1,7% for imported footwear and remained unchanged for exported footwear (see Table 4.18).

TABLE 4.18: Producer price index for footwear (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


101,4 104,3 102,6 1,2 –1,6


166,7 166,7 166,7 0,0 0,0


129,5 130,9 133,2 2,8 1,7


Figure 4.22 shows that the physical volume of production of footwear rebounded by 9,3% year-on-year after showing a 2,4% contraction in the previous quarter. Compared to the previous quarter, the volume of production increased by 4,3% following a 9,4% quarter-to-quarter growth during 2013: Q1.

TABLE 4.19: Utilisation and reasons for underutilisation of production capacity by large enterprises: Footwear (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

88,287,493,2

11,812,6

6,8

1,82,11,6

0,91,20,6

0,00,00,0

9,19,34,5

0,00,00,0


During 2013: Q2, the utilisation of production capacity by large footwear enterprises increased both year-on-year and compared to the previous quarter. Insufficient demand remained the main reason behind low capacity utilisation of footwear division, followed by shortage of raw materials (see Table 4.19). Insufficient demand, as a reason for underutilisa-tion, however, decreased significantly compared to the previous quarter.

Source: Statistics SA (2013fd)

18

Figure 4.23 shows that the year-on-year season-ally adjusted value of sales of footwear in-creased by 5,2% during the second quarter of 2013 after showing a 4,8% growth in the previ-ous quarter. The value of sales contracted by 0,3%, following a 3,8% quarter-to-quarter growth during the first quarter of 2013.

During the second quarter of 2013, footwear ex-ports accelerated by 13,2% year-on-year after showing an 8,2% increase in the previous quarter. Similarly, imports accelerated by 14,9% year-on-year, following the 13,8% growth they showed during the previous quarter. Compared to the previous quarter, footwear exports rebounded by 11,4%, while imports contracted by 22,0%. As a result, the trade deficit narrowed from R2 174,8 million in the previous quarter to R1 675,2 million in the second quarter of 2013 (see Figure 4.24).

Following the increase in production and exports in the footwear division, formal employment grew by 15,5% year-on-year and it increased by 5,1% compared to the previous quarter (see Figure 4.25). As a result, the total formal employment in the footwear division increased from 9 336 in the previous quarter to 9 812 during 2013: Q2.

4.8 WOOD AND WOOD PRODUCTS

The producer price of domestic output and exported wood and wood products increased year-on-year by 5,6% and 2,0%, respectively during 2013: Q2. The producer price for imported wood and wood products, however, contracted marginally by 0,2%. Compared to the previous quarter, the producer price for domestic output increased by 2,4%, while it contracted by 0,8% for imported wood and wood products. The producer price for exported wood and wood products remained unchanged from the previous quarter (see Table 4.20).




19

TABLE 4.20: Producer price index for wood and wood products (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


98,6 101,7 104,1 5,6 2,4


178,9 182,5 182,5 2,0 0,0


145,8 146,7 145,6 -0,2 –0,8


During 2013: Q2, the seasonally adjusted physi-cal volume of production for sawmilling and planing of wood rebounded by 0,1% year-on-year from the 6,5% contraction recorded in the previous quarter. Similarly, the volume of produc-tion for products of wood increased marginally by 1,2% year-on-year, following the 1,1% con-traction during the previous quarter. Compared to the previous quarter, the adjusted physical vol-ume of production for both sawmilling and plan-ing of wood and products of wood increased by 7,0% and 1,8% respectively during 2013: Q2 (see Figure 4.26).

TABLE 4.21: Utilisation and reasons for underutilisation of production capacity by large enterprises: Wood and wood products

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

82,582,883,9

17,5172,0

16,1

1,31,00,9

1,51,82,0

0,00,00,0

8,39,18,5

6,55,34,7


Table 4.21 shows that the utilisation of production capacity by large enterprises in the wood and wood products division increased marginally both year-on-year and compared to the previous quarter during 2013: Q2. The increase in utilisation of production capacity is reflected by the overall increase in the volume of production in the division. The main reasons for underutilisation of production capacity were insufficient demand, followed by other reasons (such as downtime be-cause of maintenance, seasonal factors and lower productivity) and a shortage of skilled labour.

Following a 3,1% year-on-year contraction in the previous quarter, the value of sales for sawmilling and planing of wood increased by 4,1% during 2013: Q2. The value of sales for the products of wood, however, accelerated from the 0,2% growth it registered in the previous quarter to 4,2% during 2013: Q2. Compared to the previ-ous quarter, the value of sales for both sawmilling and planing of wood and wood products showed an increase of 7,6% and 3,6% respectively. The increase in the value of sales for sawmilling and planing of wood and products of wood is mainly the result of the increase in the volume of pro-duction (see Figure 4.27).



20

During 2013: Q2, the value of exports increased substantially by 44,5% year-on-year and imports accelerated by 16,3% year-on-year from the 8,1% increase recorded in the previous quarter. Compared to the previous quarter, the value of exports showed a substantial growth of 25,5% while a 9,7% contraction was observed for im-port. Owing to a remarkable growth in exports and a contraction in imports, the trade deficit de-creased from R339,2 million in 2013: Q1 to R126,2 million in 2013: Q2.

The number of formal employment in the wood and wood products division grew by 0,8% com-pared to the preceding quarter; however, it con-tracted by 2,5% year-on-year (see Figure 4.29). Jobs were created in the wood products cate-gory, which showed a 5,6% year-on-year growth and a 2,0% growth compared to the preceding quarter. On the contrary, the sawmilling and plan-ing of wood category experienced a 12,3% year-on-year contraction and a 0,9% decline compared to the previous quarter. As a result, the total number of employment opportunities in the wood and wood products division increased from 34 866 in the previous quarter to 35 138 in the second quarter of 2013.

TABLE 4.22: Net balance of the BER manufacturing survey: Wood and wood products

2012: Q4 2013: Q1 2013: Q2 2012: Q3*


–73–61–76–62-56–75

–3–25

8–83–56–57–64

–245150

–73–30–29–20582457

029

4

4936565640

–12–12

–98420491112

6542866546–4–4–2


The manufacturing survey of wood and wood products division by BER is presented in Table 4.22. It shows that all varia-bles, except employment, were anticipated to increase year-on-year in 2013: Q2. The actual data also confirm the re-sults of the survey. During 2013: Q2, the business confidence shows that the majority of people were satisfied with the business conditions during the period. The outlook for 2013: Q3 is positive for all variables, except for employment and fixed investments.

4.9 PAPER AND PAPER PRODUCTS

The producer price for both domestic output and exported paper and paper products moderated year-on-year from 7,8% and 3,3% in the previous quarter to 5,5% and 1,9%, respectively, during 2013: Q2. The producer price for imported wood and wood products, however, rebounded by 3,9% year-on-year, following a 2,8% contraction in the previous quar-ter. Compared to the previous quarter, the producer price for domestic and imported paper products increased by 1,7% and 2,9%, respectively during 2013: Q2. Furthermore, the producer price for exported wood and wood products also showed a marginal growth rate of 0,2% during the period (see Table 4.23).



21

TABLE 4.23: Producer price index for paper and paper products (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


100,7 104,5 106,3 5,5 1,7


154,9 157,7 157,9 1,9 0,2


127,8 129,1 132,8 3,9 2,9


Following a 3,3% year-on-year decline in the pre-vious quarter, the seasonally adjusted physical volume of production in the paper and paper products division rebounded by 1,5% during 2013: Q2. Compared to the previous quarter, the volume of production of wood and wood prod-ucts division increased by 3,8% during the period (see Figure 4.30).

TABLE 4.24: Utilisation and reasons for underutilisation of production capacity by large enterprises: Paper and paper products (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

85,484,184,5

14,615,915,5

0,90,91,0

1,71,61,5

0,10,10,1

6,57,16,8

5,56,26,0


During 2013: Q2, the utilisation of production capacity by large enterprises decreased by 0,9 percentage points year-on-year while a quarter-to-quarter growth of 0,4 percentage points was recorded (see Table 4.24). Insufficient demand and other reasons (such as downtime because of maintenance, seasonal factors and lower productivity) were the main reasons for underutilisation of production capacity in the division.

Owing to an increase in producer price and vol-ume of production, the value of sales for the pa-per and paper products division accelerated by 6,0% year-on-year after showing a 2,6% growth in 2013: Q1 (see Figure 4.31). Compared to the previous quarter, the value of sales in the paper and paper products division increased by 3,0% mainly as the result of an increase in production volume.



22

During the second quarter of 2013, paper and paper product exports increased remarkably by 12,3% year-on-year after showing a moderate growth of 3,4% in the previous quarter. Similarly, the imported paper and paper products value accelerated by 24,6% year-on-year, during the period, following an 18,7% growth recorded in the previous quarter. Compared to the previous quarter, both exports and imports of wood and wood products expanded by 4,8% and 1,0%, respectively in 2013: Q2. As a result, the trade sur-plus expanded from R313,1 million in the previ-ous quarter to R420,8 million during 2013: Q2 (see Figure 4.32).

Despite the increase in the volume of production and exports of paper and paper products, the formal employment declined by 1,3% com-pared to the previous quarter and contracted by 2,1% year-on-year (see Figure 4.33). As a result, the total formal employment in the division de-creased slightly from 29 947 in the previous quar-ter to 29 548 during 2013: Q2.

TABLE 4.25: Net balance of the BER manufacturing survey: Paper and paper products

2012: Q4 2013: Q1 2013: Q2 2012: Q3*


586

6036

617

–166135192429–6

–357

–13–36

6–60–19–30442626

–26–45

–45–13–61–4516

–48–39–3837

–1250

–3149

–10–4–4–8

–11–17

1–5


Table 4.25 presents the manufacturing survey of paper and paper products by BER. During the second quarter of 2013, most variables were expected to decrease. The actual data, however, show that all the variables increased year-on-year during the period. The outlook for the third quarter of 2013 remained bleak, however, it is expected to improve compared to the second quarter of 2013.

4.10 RUBBER PRODUCTS

Table 4.26 shows that the producer price of rubber products for domestic output increased year-on-year by 3,9% in the second quarter of 2013 while the producer price of exported and imported rubber products increased marginally by 0,2% and 0,6%. Compared to the previous quarter, the producer price index of rubber products for domestic output in-creased by 1,1% and it increased marginally for exported and imported rubber products by 0,1% and 0,2%, respec-tively.



23

TABLE 4.26: Producer Price Index of rubber products (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


99,5 101,2 102,3 3,9 1,1


184,5 184,7 184,9 0,2 0,1


125,5 126,0 126,3 0,6 0,2


The seasonally adjusted physical volume of pro-duction of rubber products during 2013: Q2 re-bounded by 3,1%, following the 7,1% year-on- year contraction in the previous quarter (Figure 4.34). Similarly, the quarter-to-quarter growth of produc-tion volume accelerated by 12,1% during the second quarter of 2013, following the 0,9% quar-ter-to-quarter growth in the previous quarter.

Table 4.27: Utilisation and reasons for underutilisation of production capacity by large enterprises: Rubber products (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

88,487,386,9

11,612,713,1

0,80,70,6

0,20,50,5

0,00,00,0

10,511,411,9

0,10,10,0


Despite the increase in the volume of production, the utilisation of production capacity by large enterprise of rubber products during the second quarter of 2013 decreased both year-on-year and quarter-to-quarter. Insufficient demand remained the main reason behind low capacity utilisation (see Table 4.27).

The seasonally adjusted value of sales of rubber products accelerated significantly by 11,7% year-on-year after showing an 0,4% contraction in the previous quarter (see Figure 4.35). Similarly the value of sales increased by 12,0% compared to the previous quarter. The increase in the vol-ume of production during the second quarter was the main reason for the increased value of sales.



24

During 2013: Q2, exports of rubber products rebounded by 5,9% year-on-year following the 4,5% contraction in the previous quarter. Imports of rubber products, how-ever, increased further by 22,0% year-on-year after showing a 16,4% growth in the preceding quarter. Compared to the previous quarter, exports and imports of rubber products increased by 18,7% and 10,8%, re-spectively, during the second quarter of 2013. As a re-sult, the trade deficit widened from R2 104,1 million in the previous quarter to a R2 277,3 million in 2013: Q2 (see Figure 4.36).

Despite an increase in the volume of production and exports during the second quarter of 2013, formal em-ployment in the rubber products division contracted by 8,0% year-on-year (see Figure 4.37). However, it grew by 0,8% compared to the previous quarter. As a result, the total number of formal employment opportunities in the rubber products division increased from 12 379 in the previous quarter to 12 484 during the second quarter of 2013.

4.11 FURNITURE

The producer price for domestic output of furniture moderated slightly to 2,1% year-on-year from a 2,4% increase in the previous quarter. The producer price for imported furniture, however, accelerated to 1,4% year-on-year, following the 0,6% growth it registered in the previous quarter. The year-on-year producer price for exported furniture, however, re-mained unchanged. Compared to the previous quarter, the producer price for domestic output and imported furniture increased marginally by 0,1% and 0,7%, respectively, during the second quarter of 2013 (see Table 4.28).

TABLE 4.28: Producer price index for furniture (Base 2000=100)


2012: Q2 2013: Q1 2013: Q2 2012: Q2 and 2013: Q2

2013: Q1 and2013: Q2


99,9 101,9 102,0 2,1 0,1


100,1 100,1 100,1 0,0 0,0


92,8 93,5 94,1 1,4 0,7


During the second quarter of 2013, the seasonally ad-justed physical volume of production for the furniture divi-sion decelerated by 4,9% year-on-year, following the 2,6% contraction it registered in the previous quarter. Compared to the previous quarter, the volume of pro-duction increased by 3,3% during the period (see Figure 4.38).




25

TABLE 4.29: Utilisation and reasons for underutilisation of production capacity by large enterprises: Furniture (percentage)

Period Utilisation



Shortage of

Insufficient demand

OtherRaw materials

Labour


2012: Q22013: Q12013: Q2

87,178,686,0

12,921,414,0

2,32,30,8

1,51,51,1

0,00,00,0

8,316,811,8

0,80,80,3


Table 4.29 shows that the utilisation of production capacity by large enterprises in the furniture division decreased by 1,1 percentage points, year-on-year. Compared to the previous quarter, the utilisation of production capacity increased by 7,4 percentage points, which is reflected by the quarter-to-quarter growth in the volume of production in the division. Among other reasons for underutilisation, insufficient demand remained the major reason followed by a shortage of skilled workers.

While the year-on-year value of furniture sales re-mained unchanged in the previous quarter, it con-tracted by 2,5% year-on-year, during the second quarter of 2013, mainly owing to the contraction in the volume of production. How ever, owing to the quarter-to-quarter increase in the volume of pro-duction, the value of sales increased by 4,5%, compared to the previous quarter (see Figure 4.39).

During 2013: Q2, the exports of furniture increased marginally by 0,8% year-on-year and imports of furniture moderated to 18,9% year-on-year from a 23,1% growth in the previous quarter (see Figure 4.40). Compared to the previous quarter, both ex-ports and imports of furniture increased by 12,5% and 10,3%, re spec tively, during the second quar-ter of 2013. As a result, the trade deficit increased to R513,7 million in 2013: Q2 from the R477,7 mil-lion it registered in the previous quarter.

Formal employment in the furniture division de-creased significantly by 5,9% year-on-year and by 8,5% compared to the previous quarter (see Figure 4.41). Therefore, formal employment in the division decreased from 35 811 recorded in the previous quarter to 32 761 during the second quarter of 2013.




26

TABLE 4.30: Net balance of BER manufacturing survey: Furniture

2012: Q4 2013: Q1 2013: Q2 2012: Q3*


29–212525–9–514

–152437

–21–12–11

5–22

55

–24–19–10

–64383–7–8

–25

–715–2–25

–35–8

–170

–10–3

–16–23

–31–49–46–31–49–64–64–17


Table 4.30 presents the manufacturing survey by the BER for the furniture division. During 2013: Q2, a year-on-year de-crease in all variables, except for export sales, was expected. The actual data confirm the results from the survey. Business confidence shows that all respondents were not satisfied with the prevailing business conditions during the period. The outlook for the third quarter of 2013 is bleak for all the variables.

5 Conclusion

The accelerated global and domestic economy during the second quarter of 2013 prompted the growth of production in all agro-processing industry divisions, except beverages. As a result, the nominal value of sales of agro-processing increased from R121 934 million in the previous quarter to R125 646 million during the 2013: Q2. The substan-tial growth of agro-processing product exports relative to imports also induced the trade deficit of agro-processing products to contract from R13 400 million in the preceding quarter to R11 456 million during the period under review. Despite the production and export growth of the agro-processing industry, 5 555 formal jobs were shed during the period compared to the preceding quarter. Among agro-processing divisions, formal jobs were created in the footwear, textile and rubber and wood products divisions. On the other hand, beverages and tobacco, food products, wearing apparel, paper products and leather products experienced job losses during the period.

References

BER (2013), Manufacturing Survey. Bureau for Economic Research, University of Stellenbosch.

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

IMF (2013), World Economic Outlook, Update. International Monetary Fund.

Quantec EasyData (2013), RSA International Trade. Accessed in August 2013.

Reserve Bank (2013), Quarterly Bulletin, September 2013. South African Reserve Bank.

Statistics SA (2013a), Quarterly Labour Force Survey, various issues. Statistics South Africa.

Statistics SA (2013b), Consumer Price Index, various issues. Statistics South Africa.

Statistics SA (2013c), Producer Price Index, various issues. Statistics South Africa.

Statistics SA (2013d), Manufacturing: Production and Sales, various issues. Statistics South Africa.

Statistics SA (2013e), Manufacturing: Utilisation of Production Capacity by Large Enterprises. Statistics South Africa.

Statistics SA (2013f), Quarterly Employment Statistics, various issues. Statistics South Africa.

UNIDO (2013), World Manufacturing Production, Statistics for Quarter 2, 2013, Statistics Unit, United Nations Industrial Development Organisation.

Notes

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

............................................................................................................................................................................................

.............................................................................................................................................................................................

.............................................................................................................................................................................................

qquarterly economic review uarterly economic review oof ......production volume, sales, capacity...

Documents