South African manufacturing growth slowed more than estimated in May as the country’s largest oil refinery shut for maintenance and the weak global economy curbed exports.
Factory output rose 2.2 percent after gaining a revised 7.1 percent in April, Pretoria-based Statistics South Africa said on its website today. The median estimate of 13 economists surveyed by Bloomberg was for growth of 2.9 percent. Output fell 1.7 percent in the month. The data was rebased to 2010 from 2005 and the statistics agency changed the weightings of some of the categories.
South African Petroleum Refineries Ltd., a venture between Royal Dutch Shell Plc (RDSA) and BP Plc (BP/), shut its refinery in Durban on the country’s east coast between April 26 and July 1. Manufacturing accounts for about 15 percent of Africa’s largest economy. The slowdown in production growth adds to the likelihood the central bank may keep interest rates unchanged at the lowest level in more than 30 years to support growth, even as price pressures increase.
“The manufacturing sector will continue to face subdued demand,” Nedbank Group Ltd. (NED) said in e-mailed comments. “Output growth will be contained by recession in the eurozone, a more measured Chinese economy and weaker international commodity prices. At the same time, cost pressures will remain elevated, with high electricity costs, rising unit labor costs and expensive transport and logistics.”
Manufacturing isn’t the only component of the economy under pressure. Total mining output fell 0.7 percent in May from a year earlier, the statistics agency said today.
A weaker rand is providing some support for manufacturers by bolstering the competitiveness of South African exports. The currency has weakened 15 percent against the dollar this year, the most of 16 major currencies monitored by Bloomberg.
The rand traded at 9.9705 per dollar at 2:50 p.m. in Johannesburg, weakening from 9.9159 before the release of the data.
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