GOVERNMENT needs to turn its attention to the manufacturing sector if it wants Gauteng to achieve its projected 8% growth by 2014, says Standard Bank economist Goolam Ballim.

Gauteng, which contributes about 30% of the country’s gross domestic product, needs to meet this target if President Thabo Mbeki’s goal of 6% growth nationally is to be reached. Ballim was commenting on the results of the September Business Barometer, released this week, which found that the manufacturing sector was benefiting from the weaker rand, with business activity rising 0,5% from August and up 5,7% on September last year.

Manufacturers of plastic products, basic iron and steel products, and communication and transport equipment should feel great as these sectors grew more than 10% in the past three months. Manufacturers in the textiles, wood, furniture and basic chemical industries experienced between 5% and 10% growth.

“The industry will need a modestly weak but stable rand, which in a sense is beyond (provincial) government’s control. “It also requires the trade and industry department to realise the challenges these industries face,” Ballim said.  “There needs to be flexibility in the labour market. Gauteng manufacturers persistently complain about the combination of low labour productivity and high staff costs. Until increased labour flexibility is introduced, manufacturing will not help the province reach 8%.”

The Gauteng Business Barometer, developed by the provincial business sector in partnership with Standard Bank and economist Mike Schussler, registered a general 1,6% decline in the provincial economy in September compared with August, but is still 3,2% up on September last year. This was due to the province feeling the strain of higher interest rates and a slight decline in economic activity, Ballim said.

The top performing sectors in September were the manufacturing, construction and mining sectors. The construction sector showed a 1,1% hike in business activity compared with August and was 8,5% up on September last year. However, the sector that includes retailers, wholesalers, tourism businesses, financial services and transport and communication was softer all round.

Schussler said the economy remained stronger than it appeared. “I believe there is still money in the economy for financing future growth,” he said.