South African Oct manufacturing jumps 7,5%

JOHANNESBURG – South Africa’s manufacturing output accelerated to an unadjusted 7,5 per cent in volume terms in the year to October, pointing to strong underlying growth, data showed yesterday.

Manufacturing is the second-biggest sector in Africa’s biggest economy and accounts for nearly 17 per cent of the country’s economy. The strong growth in manufacturing, partly a result of a weaker rand in 2006, comes despite higher interest rates and suggested the economy was taking the recent rate hikes in its stride.Statistics South Africa said it had revised upwards manufacturing growth in September to 2,1 per cent from 1,9 per cent, while production in volume terms rose by a seasonally adjusted 0,2 per cent on a month-on-month basis.Economists said the data pointed to strong conditions in the sector, which should continue to be boosted by improved exports on the back of a currency trading about 11 per cent weaker against the dollar so far this year and around 20 per cent down on the euro.”This is a strong set of numbers, it’s not a surprise though because in October last year we had underlying issues such as outages at refineries that led to a decline,” Marisa Fassler, economist at JP Morgan, said.”Overall the conditions for manufacturing remain favourable, the more competitive exchange rate is supporting manufacturing growth,” she added.The rand, which has rebounded from a 3-1/4 year low of 7,98/US dollar hit in early October, was little changed at 7,1190 shortly after the data was released.The central bank has already raised its repo rate by 150 basis points since June to tame rising inflation and is widely expected to hike it again by 50 basis points on Thursday.Official data shows the economy expanded by 4,7 per cent in the third quarter of 2006, down on the previous quarter but still high.It grew by 5,1 per cent in 2005 – its fastest rate in more than two decades.But economists added that the robust performance of the sector and the economy as a whole opened the way for more rate hikes.”We are going to see some dip in December but the overall underlying activity and strength is holding on, the sector has not been affected negatively by interest rates,” ETM analyst Monica Ambrosi said.”So I think the Reserve Bank will not hesitate to raise interest rates to address (strong) consumer demand,” she said.Stats SA said in the three months to the end of September, manufacturing volumes rose by 0,3 per cent compared to the previous three months, also on a seasonally adjusted basis.Nampa-ReutersThe strong growth in manufacturing, partly a result of a weaker rand in 2006, comes despite higher interest rates and suggested the economy was taking the recent rate hikes in its stride.Statistics South Africa said it had revised upwards manufacturing growth in September to 2,1 per cent from 1,9 per cent, while production in volume terms rose by a seasonally adjusted 0,2 per cent on a month-on-month basis.Economists said the data pointed to strong conditions in the sector, which should continue to be boosted by improved exports on the back of a currency trading about 11 per cent weaker against the dollar so far this year and around 20 per cent down on the euro.”This is a strong set of numbers, it’s not a surprise though because in October last year we had underlying issues such as outages at refineries that led to a decline,” Marisa Fassler, economist at JP Morgan, said.”Overall the conditions for manufacturing remain favourable, the more competitive exchange rate is supporting manufacturing growth,” she added.The rand, which has rebounded from a 3-1/4 year low of 7,98/US dollar hit in early October, was little changed at 7,1190 shortly after the data was released.The central bank has already raised its repo rate by 150 basis points since June to tame rising inflation and is widely expected to hike it again by 50 basis points on Thursday.Official data shows the economy expanded by 4,7 per cent in the third quarter of 2006, down on the previous quarter but still high.It grew by 5,1 per cent in 2005 – its fastest rate in more than two decades.But economists added that the robust performance of the sector and the economy as a whole opened the way for more rate hikes.”We are going to see some dip in December but the overall underlying activity and strength is holding on, the sector has not been affected negatively by interest rates,” ETM analyst Monica Ambrosi said.”So I think the Reserve Bank will not hesitate to raise interest rates to address (strong) consumer demand,” she said.Stats SA said in the three months to the end of September, manufacturing volumes rose by 0,3 per cent compared to the previous three months, also on a seasonally adjusted basis.Nampa-Reuters