South Africa’s manufacturing output grew 5% year-on-year in December, slowing from November but still indicating a relatively strong momentum in the economy, data showed on Monday.
The manufacturing sector is the second largest in Africa’s biggest economy, accounting for nearly 17% of gross domestic product, and is crucial in attracting much-needed jobs.
Growth in December eased from an upwardly revised 6,9% the previous month, bringing growth for the whole of 2006 to 4,9%, or slightly higher expected.
Statistics South Africa said output in volume terms increased 1,9% on a monthly basis and 2,1% in the three months to December compared with the previous three-month period.
Analysts said the growth reflected a strong performing economy that had been boosted by a depreciation of the rand currency of about 10% against the dollar in 2006.
”I think these are quite reasonable numbers. If we look at manufacturing, it seems to be benefiting from the buoyant conditions in the economy,” Citadel economist Dave Mohr said.
”I think with that kind of growth rate, the Reserve Bank would feel comfortable hiking rates,” he added.
The central bank’s policy committee meets on Wednesday and Thursday to decide its next move on interest rates, with analysts divided over whether it will hike its repo rate by another 50-basis points to 9,5%.
The bank raised rates by two percentage points between June and December last year to tame rising inflationary pressures. — Reuters