Windhoek: Improved business conditions which marked the third quarter have done little to boost confidence among manufacturers. Business expectations going forward are the lowest they have been this year, Simonis Storm Securities (SSS) has found in its latest manufacturing survey, released yesterday. Only a third of manufacturers interviewed expect their situation to improve over the next six months.
At the end of the previous two quarters, 49 per cent still believed business would pick up, SSS said in its Third Quarter Manufacturing Survey, compiled on behalf on the Namibian Manufacturers Association (NMA). Around 39 per cent of manufacturers felt upbeat about the future in the first quarter.
Manufacturers’ uncertainty also reflected in the plans to employ more people. Only ten per cent of businesses surveyed intend to create more jobs in the fourth quarter of 2011. This is compared to 17 per cent in the second quarter and 23 per cent in the first quarter.
Overall uncertainty is what drives business sentiments currently, Rudolf Kuschke of the SSS research desk said. Exchange rate fears and lagging exports are fuelling the uncertainty, he said.
Although the weaker exchange rate boosted business conditions the past quarter, it did little to make Namibian products more competitive.
The Namibia dollar lost 20 per cent against the greenback and ten per cent against the euro over the period, with 23 per cent of manufacturers reporting below normal levels – the lowest so far this year. This could be an indication of the relative weakness in demand in foreign countries forcing them to search for alternative markets, SSS said.
“Although the low level of export order books show that the current exchange rates are not enough to make local manufacturers competitive, the weaker currency did however prevent export order books from an even steeper fall in our view,” SSS said.
The weaker currency pushed production volumes in the third quarter to the highest this year – 27 per cent of those surveyed reported higher volumes compared to nine per cent in the second quarter. This turnaround was also mirrored in capacity utilisation rising seven percentage points to 75 per cent, SSS said.
According to the survey the stock of finished goods improved slightly, but remained in negative territory for the third consecutive quarter. This signals that companies are still uncertain about future sales, SSS said.
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• Competitive imports 53% (of businesses view this as the biggest factor limiting production)
• Lack of skilled labour 47%
• Insufficient domestic demand 40%
• Shortage of raw materials 30%
• Insufficient foreign demand 20%
• Uncertain economic environment 20%
WHAT are the biggest factors derailing the manufacturing sector in Namibia during the third quarter?
According to the Third Quarter Manufacturing Survey, released yesterday by Simonis Storm Securities on behalf of the Namibian Manufacturers Association, competitive imports top the list. More than 50 per cent of all the companies interviewed named competitive imports, especially in the food industry, as the biggest stumbling block limiting production volumes.
A lack of skilled labour remains a major hampering factor. This is especially the case in the segment for basic metals and fabricated metal products, where 80 per cent of businesses identified it as a problem.
A shortage of raw materials dented production in the meat and fish industry, the survey showed.