Improving world trade spurs SA exports

Improving world trade spurs SA exports

The Industrial Development Corporation’s Sectoral Trends report details the mining and manufacturing sectors’ performance for 2013, tracking trends and highlighting areas for growth….

sectoraltrends insideSouth Africa’s merchandise exports grew significantly in rand value terms in 2013, spurred on by a weakening exchange rate and improving world trade, according to a Sectoral Trends report recently released by the Industrial Development Corporation (IDC).

The report, which looks at South Africa’s primary and secondary sectors performance in 2013, notes that export values in the agriculture, forestry and fishing sector increased by 32% year-on-year, driven by maize, apples, grapes and wine exports to Europe and Zimbabwe. The physical volume of production in the sector, however, recorded a modest 2.3% growth.


Production disruptions, falling prices and rising costs did little to affect the rise in exports in the mining sector, which recorded a growth of 10% in value terms in 2013. Export growth in the sector was led by the “Other mining” subsector, which is dominated by platinum group metals (PGMs) and iron ore.

Despite increased production volume, the other subsectors – coal mining, and gold and uranium mining – recorded negative growth in terms of export value, with coal mining contracting by 2.7% compared to 2012. The value of gold and uranium exports declined by 10% year-on-year.

In terms of physical production volume, the mining sector’s performance surprisingly saw an increase of 4.2% in 2013, despite slower rates of increase in world demand for commodities and protracted industrial action in South Africa. At subsector level, performances varied with sectors such as the PMGs and gold mining rebounding in 2013, although from very low bases.


Most of the manufacturing sector’s subsectors recorded increases in 2013. Of note, the motor vehicle, parts and accessories subsector; basic iron and steel industry; and the basic chemicals subsector posted moderate increases in export values at 9.4%, 10.4% and 11.4% respectively. Poor performers included the coke and refined petroleum, metal products; and professional and scientific subsectors.

It is worth mentioning that the motor vehicle, parts and accessories subsector performed well in the first half of 2013, when exports rose by 23% compared to the same period in 2012. However, the sector suffered in the third quarter of 2013 when it was hit by industrial action, which negatively affected its export performance for the second semester.

The best performers in the manufacturing sector are leather and leather products and the basic non-ferrous metal products subsectors. The leather and leather products subsector increased its exports by 65.5% in 2013, whilst the basic non-ferrous metal products subsector posted an increase of 38% in the same period.

Overall, the manufacturing sector increased its physical volume of production by 1.4%. In a sector long afflicted by difficult marketing conditions globally, several manufacturing subsectors reported output gains in 2013 with the relatively small leather and leather products subsector posting a strong 12.5% growth. This subsector was followed closely by the basic non-ferrous metal products subsector, which reported an increase of 11.5%. The positive performance of these two subsectors is mainly due to high domestic consumption and growing demand from sub-Saharan Africa.

But these two manufacturing subsectors’ positive performance is different to that of most subsectors’. Eleven subsectors recorded contractions in productions in 2013; the report cites several factors for this, including, among others: disruptive industrial action; insufficient demand in external and/or domestic markets; and serious competitiveness challenges at local factory level due to rising input costs, skills shortages and inadequate power supply.

The most affected subsectors – small professional and scientific equipment, and motor vehicles, parts and accessories – saw substantial contractions in output. Protracted industrial action in the automotive industry during the third quarter of the year seriously affected the motor vehicles, parts and accessories subsector – which accounted for 6.7% of the total manufacturing output in the fourth quarter of 2013 – resulting in serious production stoppages.

The subsector subsequently reported a 0.3% increase in 2013, with a debilitating 5.4% contraction.

Production capacity utilisation

Production capacity utilisation is a vital measure of a company’s productive efficiency. In 2013, manufacturing companies in South Africa recorded a production utilisation capacity of 84% year-on-year, a 0.1 percentage point decline since 2012.

The furniture subsector came out tops in 2013, recording the highest production utilisation capacity, 91.9%, as well as the largest increase on an annual basis (10.8 percentage points). The leather and leather products subsector recorded increased output leading to a subsequent rise in production capacity utilisation by 5.9 percentage points, to 75.5%.

Despite the “other manufacturing” – glass and glass products subsector, and rubber products subsector – production utilisation capacity remaining just above 85%, the three subsectors recorded declines in capacity utilisation.


The report states that for South Africa’s unemployment rate to fall substantially from the current 24.1%, large-scale employment creation is required in the private sector. Government support policies and development funding aimed at improving competitiveness in the textiles, clothing and footwear subsectors appear to be bearing fruit.

The footwear industry is one of few subsectors that recorded the largest percentage increases in employment. The subsector posted growths in production capacity, and output volumes increased during 2013. In addition, the textiles and clothing subsector is seeing a reduction in shedding jobs. In turn, the food processing industry and the machinery and equipment subsectors – the biggest employers in the broad manufacturing sector – recorded gains in employment figures.

The mining and agriculture sectors are not faring well. The mining sector shed 14 300 jobs in 2013, with “Other mining” subsector segments such as PGMs and iron ore mining shedding more than

3 000 jobs. The agriculture, forestry and fishing sector also saw declines in employment figures. The employment levels in the sector were 0.7% lower in the fourth quarter of 2013 compared to the same period in 2012.


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