South Africa’s manufacturing output rose by an unadjusted 4,2% in volume terms in the year to August, a slower rate than the 5,9% rise in the previous month, data showed on Wednesday.
Compared with July, manufacturing production in volume terms fell by a seasonally adjusted 0,7%, Statistics South Africa (Stats SA) said.
Manufacturing is the second-biggest sector of the continent’s biggest economy after financial services, accounting for nearly 17% of gross domestic product.
The sector has benefited from a weaker currency since May this year, but economists warn that it may still be affected by higher interest rates.
The South African Reserve Bank has hiked its key repo rate by a full percentage point to 8% since June and is widely expected to increase rates again by at least 50 basis points on Thursday.
”I think it’s still reflecting the buoyancy of internal demand, but the prognosis is for some softness in light of the tightening in monetary policy, which will begin to have a more substantial restraining effect over the summer [December],” Goolam Ballim, chief economist at Standard Bank, said.
The slowdown in growth would do little to dissuade the central bank from hiking rates, he added.
Stats SA said manufacturing volumes rose by 2,2% in the three months to the end of August compared with the previous three months, on a seasonally adjusted basis.
It also revised July year-on-year output to 5,9% from 5,8% previously and growth in June to 6,1% from 6,3%. South Africa’s Purchasing Managers’ Index (PMI) — which points to trends in manufacturing ahead of official data — dipped in September to 56,6 on falling output and new sales orders. — Reuters