1. Manufacturing Bulletin Q3-2011 Presentation : Media Briefing 8 December 2011 By Dr Iraj Abedian Pan-African Investment & Research Services(Pty) Ltd.

2. Slide # 2 Outline 1. Introduction 2. Overall Manufacturing Business Confidence 3. Current South African Manufacturing Trends 4. Manufacturing Survey Results: Q3-2011 5. Concluding Remarks

3. Slide # 3 Introduction: Q3-2011 Manufacturing Circle Survey Profile of Survey Participants

4. Overall Manufacturing Business Confidence

5. Current South African Manufacturing Trends

6. Rebound in Q3-2011 Manufacturing Output Source: Statistics South Africa, Q3 2011 GDP  Manufacturing activity rebounded to -1.9% q/q in Q3 2011, up from -8.8% in Q2 2011.  This was driven by the tentative global economic environment and the disruptions in production caused by the prolonged strike action in Q3 2011.  However, the sharp depreciation in the rand since August prevented a steep decline continuing into Q3. Manufacturing Output

7. Manufacturing Employment in Q3-2011 Source: Statistics South Africa, Q3 2011 Quarterly Labour Force Survey  Employment levels rose marginally in Q3 2011, as the sector created an additional 2000 jobs. Employment Trends in the Manufacturing Sector

8. Manufacturing Outlook Remains Hesitant Source: Bureau for Economic Research  Activity in the manufacturing sector is expected to remain sluggish on the back of a depressed global economic environment and moderating domestic demand. Kagiso Purchasing Manager’s Index

9. Manufacturing Survey: Q3-2011

10. Demand Conditions: Export-Orientation Profile  The ratio of domestic sales to total sales still outweighed that of exports, with 83% (previously 88%) of manufacturers shifting 60% or more of their allocations to the domestic market.

11. Demand Conditions: Domestic vs. Exports Sales

12. Supply Conditions: Input Costs and Ratio of Components  There was a significant acceleration in production costs as 94% of survey respondents recorded growth of up to 15% in total input costs. The key driver was a rapid increase in imported input costs (94% of manufacturing CEOs saw their imported input costs rise further in Q3).  This significant rise is in tandem with the rapid acceleration in producer prices.

13. Employment Conditions  Employment levels amongst the manufacturers surveyed improved in in Q3 2011. The share of respondents who increased their employment levels by between 1 and over 5% rose from 30% in Q2 2011 to 40% in Q3 2011.  The skills set in the industry remains mediocre.

14. Labour Productivity and Regulatory Environment  On the balance labour productivity levels remained unchanged during Q3 2011.  Even though the regulatory environment remained largely the same, there was a slight pick-up in survey respondents who were optimistic about the regulatory environment.

15. Financial Conditions  There was a slight widening in profit margins during Q3 2011 in tandem with the increase in manufacturing sales.  The share of respondents who recorded a profit change of 15% and more doubled from the preceding quarter, to 16%.  There was a small increase in the number of respondents registering a debt to equity ratio of 65% or more.

16. Financial Conditions  There was a 10% increase in the share of respondents accessing finance at between JIBAR plus 3% and JIBAR plus 6%.

17. Concluding Remarks:  The manufacturing sector continues to face serious bottlenecks;  Based on the survey results, the domestic manufacturing sector should see further improvement during Q4- 2011.  However, the unfavourable global economic environment and moderating domestic demand will keep the growth in the sector contained.

18. Slide # 18 Thank you for your attention