South African manufacturing growth accelerated to 3.9 percent in January, the fastest pace since July, giving the central bank room to keep interest rates unchanged next week.
Factory output rose from 2 percent in December, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 11 economists was for an increase of 2.7 percent. Output gained 2 percent in the month.
“This figure shows that the economy is not necessarily in need of more monetary stimulus,” Ilke van Zyl, an economist at Vunani Securities Ltd., said in a phone interview from Johannesburg. “The interest rate will remain unchanged well into next year.”
The Reserve Bank has kept its benchmark interest rate unchanged at 5 percent, the lowest in more than 30 years, since July to help support growth in Africa’s biggest economy. While the rand’s 8.4 percent slump against the dollar this year is adding to pressure on inflation, it may benefit manufacturing, which makes up about 15 percent of gross domestic product.
The currency has become “a lot more competitive,” presenting an opportunity for manufacturers competing for customers internationally, Trade and Industry Minister Rob Davies said on March 7.
South Africa’s economy grew at a faster pace in the final quarter of last year than the previous three months as manufacturing and agricultural output expanded, the statistics agency said on Feb. 26. The purchasing managers’ index rose in February, showing an expansion in factory output for the first time in six months, Kagiso Tiso Holdings said on March 1.
The rand extended its gain against the dollar after the data was released, rising 0.3 percent to 9.2333. The yield on the rand bond due in 2021 was little changed at 6.52 percent.
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