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Growth in manufacturing positive

13 March 2010 No Comment

The growth recorded in the manufacturing sector in the fourth quarter of 2009, according to the latest figures on the Gross Domestic Product (GDP) released by Statistics South Africa today, is positive news for a battered sector, the trade union Solidarity said today.      The manufacturing sector made the largest contribution to growth in the South African economy in the past quarter.

However, Solidarity warned that the revival would not lead to an immediate drastic increase in job creation and that it would possibly take several months before job creation in this and other sectors recovered.

The manufacturing sector grew by 10,1% and contributed 1,5 percentage points to the 3,2% growth in the GDP.

The sector experienced tremendous pressure in 2009 following a 25,5% decrease in growth in the first quarter of 2009.

This setback was followed by another knock-out blow in the second quarter when growth decreased by 11,1%.

“The improvement recorded in the manufacturing sector in the fourth quarter of 2009 holds positive prospects for job creation in the sector. However, patience is now needed because job creation traditionally only follows after growth. Nevertheless, from a labour perspective the fact remains that there is hope for improvement here,” explained Solidarity spokesperson Jaco Kleynhans.

Meanwhile Solidarity emphasized that the prospects of job creation reflected by the positive expectations in, among others, the Kagiso Purchasing Managers’ Index (PMI) are now within reach thanks to the improvement in the GDP.

The Kagiso PMI’s employment category improved from 46,6 to 48,2 index points from November 2009 to December 2009.

In January, this category passed the 50-point mark and is now at 51,9 index points.

Solidarity does, however, warn that everything isn’t rosy in the latest GDP figures.

“The government sector’s contribution to the GDP was the second largest. This sector grew by 7% and contributes 1 percentage point to the growth in the GDP. However, this growth isn’t sustainable and it should be taken into account that this sector’s growth depends on taxpayers,” Kleynhans said.

In addition, Kleynhans explained that the decrease in growth in the construction sector was becoming a cause for concern.

“It is clear that there is now a sharp decline in the number of construction projects because this decline leaves a clear mark on the sector’s growth. In the first quarter of 2009, the construction sector displayed growth of 10,7%, followed by 8,7% in the second quarter and 6,1% in the third. Sustained development and construction projects are now needed to ensure that this sector doesn’t continue to lose growth momentum,” Kleynhans said.

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