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Production levels highest in Q4 of 2011

Local manufacturers recorded their highest year-to-date production volumes in the fourth quarter of 2011, according to a Namibia Manufacturers Association/Simonis Storm Securities Manufacturing Survey released this week.

The survey shows that production volumes increased by 11 percentage points; the highest level for 2011, with net 38% of respondents experiencing increased production volumes. The increase came mainly from the food sector, with the holiday season likely being the driving factor.
But despite the increase, order book levels decreased substantially, with net 0 respondents experiencing above normal order book levels. This was down from 10% in Q3. Export order books also remained unchanged, with net 23% of respondents reporting below normal levels. Stock levels increased slightly and is now at normal levels.
“The relatively small change is a signal that production over the 4th quarter was largely matched by consumer demand during the period,” the survey found out.
Although net 19% of respondents viewed general business conditions as good during Q4, this measure protracted by 8 percentage points from Q3 (27%). According to the survey, the slightly weaker business conditions likely stem from a stronger currency, which made Namibian goods less competitive internationally resulting in deteriorating order book levels.
“This is evident as changes in the measures for order book levels as well as general business conditions have moved in tandem with changes in exchange rates (N$/US$, N$/EUR) since the beginning of the series.”
Going forward, expectations for higher production volumes have deteriorated quite substantially, with only net 12% of respondents expecting to increase production volumes in the 1st quarter of 2012. This is a fall of 28 percentage points from Q3 and the lowest reading in the series.
Net 46% of respondents expects higher selling prices in the next quarter, which is slightly less than the net 53% recorded in Q3, but still at relatively high levels.
The employment outlook improved, with net 19% of respondents expecting to employ more people in Q4. This is a 9 percentage point improvement from Q3.
Higher selling prices and an improvement in the employment outlook resulted in the outlook for general business conditions improving. Net 42% believed that the business situation would be better in six months, up from net 33% in Q3.
“The relatively weaker outlook for lower volumes of production are likely the result of some seasonality caused by a hangover effect from the festive season, as well as weaker order books. However manufacturers still believe that business conditions will improve over the next few months. This may also be in anticipation of government spending beginning to realise as the Government begin to implement TIPEEG.”

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