Manufacture deteriorates further

Wed, 18 Jun 2008

Confidence in the manufacturing sector has sunk to a seven-and-a-half year low, the Bureau for Economic Research said on Tuesday.

It said the manufacturing business confidence index had declined to 37 index points during the second quarter.

"In all, the results sketch a grim outlook for the sector and suggest that we may have to be more patient in expecting an improvement," said BER economist Christelle Grobler.

She said the sector seemed to be suffering under deteriorating business conditions in both the local and global economies as rising prices and, domestically, the rising interest rate, impacted on demand.

Performance of the sector was also constrained by factors such as the shortage of skilled labour.

Support from the domestic market fell away, with most respondents reporting declines in domestic sales and order volumes.

Manufacturing fixed investment had contracted for the first time since 2001, signalling increased caution among manufacturers.