SA factory output surges in February

SA factory output surges in February

FMCG SUPPLIER NEWS

Fin24 - Apr 12th 2012, 08:20

Johannesburg - Growth in South Africa’s manufacturing output outpaced expectations in February, adding to signs that domestic demand is recovering and backing the case for higher interest rates.
 

Factory output grew by 4.1% year-on-year in volume terms in February from a revised 2.3% in January, Statistics South Africa said on Wednesday. Economists in a Reuters survey expected growth of 2.0%.

On a month-on-month basis, production in volume terms grew by a seasonally adjusted 2.8%. It expanded 1.6% in the three months to February compared with the previous three months.

The manufacturing sector contributes about 15% of gross domestic product and is a major creator of jobs for the largely unskilled labour force in the country where unemployment has languished for years at around 20 to 25%.

“It’s a really good number, especially since the manufacturing numbers have had trouble building up steam,” Efficient Group economist Merina Willemse said.

“It shows a promising growth in this industry, supporting perhaps a more optimistic economic figure.”

The Reserve Bank has left its repo rate unchanged at 5.5% in the last 16 months to aid economic recovery after a recession in 2009, but some analysts say monetary tightening could resume at the end of the year to curb inflation.

The rand was firmer at R7.9633/$ from R7.9840 before the manufacturing data was released.

The yield on the 2015 bond dipped to 6.75% from 6.76% prior, while that for the 14-year bond was unchanged at 8.5%.

South Africa plans to spend R5.8bn over the next three years to help manufacturers affected by the global economic downturn upgrade their factories, improve products and train workers, the trade minister said this month.