South Africa’s manufacturing jumps to best in over 2 years
Statistics South Africa said on Tuesday in Johannesburg that manufacturing output expanded by 4.6 per cent year-on-year in April, the biggest growth since June 2016.
Analyst surveyed by Reuters had forecast a modest expansion of 1.35 per cent.
“Production of motor vehicles soared by 18.6 per cent, electrical machinery jumped 12.2 per cent and the basic iron and steel category saw 9.4 per cent growth.
“Only clothing and footwear showed a contraction,” the agency said.
The economy shrank 3.2 per cent in the first quarter, data showed last week.
There has been a squabble between government officials and the ruling African National Congress over the mandate of the central bank, dragging the currency to a 1-year low.
Nationwide power outages, known as load-shedding, by ailing Eskom at the start of the year, battered manufacturing and mining.
But since March blackouts have eased after the government poured billions of rand in emergency funding into the utility.
“The biggest factor was load-shedding and now you have some normalisation.
“It’s the heavy energy users that have contributed the most. So we can anticipate a recovery, but it won’t be impressive growth,” said Nicky Weimar, a senior economist at Nedbank.
The data barely moved the rand, which traded steady at 14.7800 per dollar at about noon.
Bonds were soothed, with the yield on 10-year government issue down 6 basis points.
“We don’t foresee a recession this year. But the consumer spending will continue to struggle, especially with the conflicting messages coming from government and the ANC about economic policy,” Weimar said.