South African manufacturing output fell 2.9 percent in February as stagnant domestic and global growth curbed demand, offsetting the benefits of a weaker rand.
Factory output declined from revised growth of 3.7 percent in January, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of nine economists was 2.1 percent. Output slipped 3.1 percent in the month.
“The outlook for both manufacturing and mining remains uncertain as the modest inventory rebuild and more competitive exchange rate vie with moderating global growth and domestic uncertainty,” Johannesburg-based Rand Merchant Bank said in e- mailed comments before the release of the data. “A high annual base should have depressed manufacturing production growth” in February.
A recession in Europe, which accounts for a fifth of South African exports, and local labor unrest have curbed growth and undermined consumer confidence in South Africa. The Reserve Bank and National Treasury expect the economy to expand 2.7 percent this year, less than half the 7 percent the government is targeting to address a 24.9 percent unemployment rate. Manufacturing makes up about 15 percent of South Africa’s gross domestic product.
The central bank has kept its benchmark interest rate unchanged at 5 percent, the lowest in more than 30 years, since July to bolster growth and consumer demand. Consumer confidence slumped to the lowest level in nine years in the first quarter, First National Bank and the Bureau for Economic Research said in an e-mailed statement on April 9.
While the rand’s 5.1 percent slump against the dollar this year has boosted the competitiveness of the nation’s exports, it has also pushed up the cost of oil and other imports, adding to pressure on inflation.
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