However, production is likely to be supported by steady growth in consumer spending, with the latest consumer confidence figures released by First National Bank (FNB) and the University of Stellenbosch's Bureau for Economic Research showing sentiment remained firm this quarter.

Figures released by Statistics SA yesterday showed production had expanded at a rapid pace on an annual basis, rising 5,3% in October compared with a year ago.

Vector Securities' chief economist Johan Rossouw pointed out that the sector's performance was particularly weak in import-competing sectors, where production and sales dropped.

"Closer analyses quite clearly point towards the detrimental impact of rand-induced imports as a probable major contributing factor towards the pronounced slowdown in domestic manufacturing production volume and sales value," said Rossouw.

Although radio and television manufacturers have been suffering from a flood of cheaper imports for some months already, the clothing and textile industry and basic iron and steel industry also showed a drop in production because of competition from cheaper imports, said Rossouw.

However, overall production was likely to be sustained by steady consumer demand, which helped lift production in the furniture and motor vehicles categories.

FNB's chief economist, Cees Bruggemans (pictured left), said yesterday that strong levels of confidence expressed by higher income consumers improved the outlook for spending on durable goods, such as cars and furniture, and semidurable goods, such as clothing and footwear.

"Furthermore, the prospects for consumer spending in general and spending on nondurables, such as food and beverages, and services remained bright given the upward shift in the confidence levels of the low income groups," he said.

Consumer confidence could rise even further next year, prolonging the upswing, which was being driven by consumer spending.

Standard Bank's latest trade activity index also reflected bullish consumer spending, with the index rising to 56 points last month, from 50 in October. This augured well for a "bumper" Christmas sales season for retailers, said Standard Bank.

Conditions for businesses in general also remained good, with the business confidence index compiled by the SA Chamber of Businesses steadying last month at 125,1 points, slightly down from October's index reading of 126,5.

The chamber said the favourable conditions boosting the business mood had peaked, but sentiment would probably remain positive in the foreseeable future.