Gloomy Cape Manufacturing confidence - March 2001

Posted On Monday, 19 March 2001 03:01 Published by
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EXPECTATIONS in the Western Cape's manufacturing sector took a sharply negative dip in the latest survey conducted for the SA Chamber of Business (Sacob).

EXPECTATIONS in the Western Cape's manufacturing sector took a sharply negative dip in the latest survey conducted for the SA Chamber of Business (Sacob).
The outlook for the next 12 months weakened from a positive response of 72% to 59%.
Sentiment in the Cape moved against the national trend, as the average improved from 58% to 60%
since the previous survey, conducted in November.
The only other region with a worsening confidence profile is Kwazulu-Natal. Although its decline
was smaller - by nine percentage points as opposed to the 13 recorded in the Western Cape -
Kwazulu-Natal was the only region to slide below the 50% mark, from 57% to 48%.
The biggest positive swing was in the Eastern Cape, where optimism about the year ahead jumped by
19 percentage points, from 55% to 74%. Gauteng registered an increase from 55% to 59%, while the
other northern provinces remained level at 56%.
Sacob CEO Kevin Wakeford says the better outlook in the Eastern Cape is directly linked to the
improved fortunes of the automotive industry, which is strongly represented in that region. "The
sector is booming, with record levels being achieved in the domestic market," he says, "while
exports are also doing well, particularly in the component sector."
The Western Cape's more morbid outlook is, however, not so easy to explain. Wakeford believes it
is partly seasonal, with expectations bound to decline at the end of the major holiday season.
He also suspects that the Western Cape's high crime levels, related to gangland activities, may
impact negatively on perceptions. And the bombings, now largely a Western Cape phenomenon, would
restrict optimism in the tourism industry.
Countrywide, expectations for sales improved from 69% to a positive response of 75%; for increased
inventories from 48% to 55%; and for output from 68% to 69%. The percentage of manufacturers
expecting to invest in existing plant over the next 12 months declined from 61% to 58%, while the
response for investment in new capacity remained level at 61%.
Prospects for employment remain subdued. Half the respondents (51%, unchanged from the previous
survey) expect to employ skilled workers, while those thinking of taking on unskilled staff
declined from 46% to 44%.
More than half the respondents manufacture intermediate goods, while the remainder is equally
divided between consumer goods and capital goods. They represent mostly large employers, with 71%
of respondents employing more than 100 people and 21% employing fewer than 50 people.
* Sacob's business confidence index - based not on a survey, but on a set of 13 indicators - is
maintaining a level between 99 and 100 points. The average for last year was 101.8, well up from
the 92.1 for 1999 and 91.2 for 1998.
In fact, last year showed the highest average since the democratic elections of 1994, thanks
mainly to a spurt around the millennial change-over. A high of 109.9 was reached in January 2000.
Sacob remains opposed to the introduction of capital gains tax (CGT), believing it will increase
the cost of capital and so impact negatively on investment decisions and economic growth.
When he delivered his annual budget on February 21, Minister of Finance Trevor Manuel postponed
the introduction of CGT from April to October this year.

Publisher: Cape Business News
Source: Cape Business News

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