Growth in manufacturing production rose by 1,3% year-on-year in January, Statistics South Africa said on Thursday.
“Manufacturing production increased by 1,3% year-on-year in January 2011, higher than the 0,2% increase in December 2010 compared with December 2009,” Stats SA said.
The increase was driven by higher production in the motor vehicles, parts and accessories and other transport equipment division and the food and beverages division.
This was followed by the petroleum, chemical products, rubber and plastic products division and the wood and wood products, paper, publishing and printing division.
“The key drivers to January’s growth were the steel and petroleum sectors, which collectively account for around 45% of total manufacturing production,” said Kgotso Radira, economist at Investec Group Economics, in a statement.
“The production of motor vehicles, parts and accessories remained positive on the month after being affected by industrial action in the latter part of 2010.”
Radira said although growth had recovered, it was “not broad based across all sub-sectors in line with the slow recovery in global demand”.
“The outlook is positive for the sector but policy uncertainty and potential electricity shortages could impede the sector’s growth potential.”
He said a weaker rand would not help the manufacturing sector’s global competitiveness.
“The cost of doing business, rigid labour laws, ageing transport infrastructure and the power of labour unions are some of the challenges facing the economy and therefore a weaker rand will not help overcome these problems.”
He said it would be more helpful to have a stable rand exchange rate as businesses could then plan better. — Sapa