South African manufacturing rebounded in April, giving the central bank room to keep lending rates unchanged.
Factory output rose 7 percent after contracting 2.2 percent in March, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of 13 economists was for growth of 2 percent. Output increased 8.4 percent in the month.
“Although the sector has been under pressure, we expect the rand’s recent depreciation to offer some support in the months to come,” Jeff Gable, head of macro and fixed-income research at Absa Capital in Johannesburg, said in a note to clients before the data was released.
The currency declined 11 percent against the dollar in May, extending the drop this year to 17 percent, making exports cheaper for buyers. The Reserve Bank cut its forecast for growth last month as gross domestic product growth fell to the slowest pace since the 2009 recession in the first quarter. Manufacturing accounts for about 15 percent of the economy.
Economic expansion slowed to an annualized 0.9 percent in the first three months of the year, slower than the 2.1 percent pace in the fourth quarter, Statistics South Africa said on May 28. The central bank reduced its forecast for growth this year to 2.4 percent from 2.7 percent on May 23. That will be the slowest pace since a recession in 2009.
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