South Africa’s factory output growth jumped to 4,9% year-on-year in September, largely due to base effects after a strike at vehicle parts manufacturers hit production in the same month last year.
Statistics South Africa said on Tuesday growth accelerated from an upwardly revised 0,5% in August, but shrunk 0,6% on a month-on-month basis.
Production for the third quarter was down 2,5% compared to the previous three months.
”The higher annual growth rate in manufacturing production for September 2008 is mainly due to strike action within the motor vehicle parts and accessories industries during September 2007,” it said.
Analysts said the number masked weakness in the sector, highlighted by poor manufacturing activity data. The Investec purchasing managers index was steady at 47 in September, below the key 50 mark and pointing to contraction.
”There was a slump this month last year so I would not get excited about this number,” said Kay Walsh, economist at Rand Merchant Bank.
”We do not expect a mass comeback in manufacturing production. It will take a while for it to recover with domestic demand rapidly slowing. At the same time the global environment is not favourable at the moment.”
Household demand is easing sharply, largely due to higher interest rates and high inflation.
New vehicle sales are tumbling year-on-year and retail sales are also falling, while house prices are in decline as households nurse dwindling budgets.
The central bank raised its repo rate by five percentage points to 12% between June 2006 and June 2008 to try tame inflation. Consumer prices appear to have peaked, though, raising hopes of an early rate cut.
Most analysts predict cuts in 2009, although speculation is mounting a move may come sooner, despite a sharply weaker currency.
Manufacturing accounts for about 16% of the economy, making it the country’s second biggest sector, and key to creating much-needed jobs. – Reuters