FIGURES due this week are expected to show that growth in manufacturing remained weak in December, indicating the extent to which slower global demand and strike activity have affected the sector during the year.
Standard Bank economist Thabi Leoka notes that December is usually a weak month as factories close for Christmas.
Manufacturing production figures for December are due on Thursday from Statistics South Africa.
"We expect manufacturing production to have slowed to 2.6% year on year in December from 3.4% in November, but improved on a quarterly basis," Rand Merchant Bank global markets economist in South Afroica Carmen Nel says.
"We expect the 2.6% because there was some moderation in domestic demand in December and concern of a spillover from the mining supply sector."
The slowdown in growth is backed by a leading indicator of activity in the mining sector — the Kagiso purchasing managers index (PMI), which fell to 47.4 in December from 49.5 in November. Anything below 50 suggests a contraction in manufacturing activity.
"Manufacturing will slow because of the structural challenges in the sector such as a rather uncompetitive industrial sector, and very soft offshore demand," ETM Analytics economist Jana le Roux says.
"We think the manufacturing sector is likely to produce benign growth at best this year."
The latest PMI reading for last month improved, but remained below 50, supporting views of a subpar performance by the sector this year. More worrying was the drop in the employment subcomponent of the index, which lost a further 2.4 points to 42.3 last month after falling seven points in December.
Bureau for Economic Research senior economist Hugo Pienaar says this does not bode well for job creation in the sector.
Ms le Roux says: "While we may still see activity in manufacturing, the most recent challenges posed by labour unrest and the consequent expected wage increase demand may leave employers less inclined to expand their labour force."
Employers have warned that granting high wage settlements will mean they will not be able to add jobs or might even be forced to trim their staff complements.
An update on unemployment will be released tomorrow with Statistics South Africa releasing its fourth quarter jobs report.
The quarterly labour force survey is expected to show a moderate deterioration in the unemployment rate — which stood at 25.5% in the third quarter.
"We will probably see a small contraction in the total number of jobs. The labour unrest, rising input costs, the slowing global economy will have contributed to this," Investment Solutions chief strategist Chris Hart says.
Ms Leoka expects employment this year to be negatively affected by companies laying off employees as a result of under-pressure margins.
An update on how businesses are feeling about economic conditions will be revealed when the South African Chamber of Commerce and Industry publishes its business confidence index for last month on Thursday.
The index improved from 91.7 points in November to 93 in December, but was still not at a convincing level to investors, the chamber said at the time.