SA manufacturing output quickens
South Africa’s manufacturing output growth quickened to an unadjusted 1,4% year-on-year in January, despite an energy crisis that knocked industry, official data showed on Wednesday.
Compared with December, manufacturing production in volume terms increased, unexpectedly, by a seasonally adjusted 1,1%, Statistics South Africa said.
“We expected a contraction of physical, seasonally adjusted output of about 1%, so obviously this figure is better than expected,” said Efficient Group economist Fanie Joubert.
“In general, it is low but it is not contracting so production wasn’t that badly affected, as expected, by the electricity problems in January.”
The data offers few pointers ahead of the Reserve Bank’s decision next month on interest rates, with the sector still under pressure despite the growth in January.
South Africa has suffered chronic power shortages as state utility Eskom struggles to satisfy growing demand. The crisis escalated in January when blackouts hit factories and forced the country’s biggest mines to shut production for five days.
Manufacturing accounts for about 17% of the country’s gross domestic product, and ranks as the second-biggest sector after financial services. It grew by an annualised 8,2% in the fourth quarter of 2007 after shrinking by 2,5% in the third quarter.
But South Africa’s Purchasing Managers Index (PMI), a key measure of manufacturing activity, fell to a four-and-a-half low of 46.4 in February, pointing to pressures ahead.
The Reserve Bank left its key repo rate unchanged at 11% in January despite signs of persistent inflationary pressures, amid signs the economy is feeling the pinch of 400 basis points worth of rate hikes since June 2006.—Reuters.