South African manufacturing growth slowed more than economists forecast in June as a global economic slowdown damped demand for exports, threatening the expansion in Africa’s biggest economy.
Factory production, which makes up 15 percent of the economy, rose 0.8 percent from a year earlier after advancing a revised 4.4 percent in May, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of eight economists was for growth of 3 percent. Output declined 2.4 percent from a month earlier.
“Production activity appears to have softened in recent months, reflecting the slowdown in the global economy, especially within the euro-area,” Kevin Lings, an economist at Stanlib Asset Management in Johannesburg, said in a note to clients. “For 2012, we expect manufacturing growth to average less than 1.5 percent, which is certainly very disappointing.”
The central bank last month lowered its benchmark lending rate for the first time since 2010, reducing it by half a percentage point to 5 percent to bolster the economy as Europe’s debt crisis curbs export demand. The government is forecasting economic growth this year of 2.7 percent, which would be the slowest pace since a recession in 2009.
The rand was little changed at 8.2065 against the dollar as of 2:40 p.m. in Johannesburg compared with before the data was released. The yield on the R157 government bond, due 2015, rose 2 basis points, or 0.02 percentage points, to 5.59 percent.
“The manufacturing sector remains susceptible to renewed weakness in the global economy, particularly in the euro area, through possible declines in exports,” the Pretoria-based Reserve Bank said on July 23 in its annual economic report.
South Africa’s seasonally adjusted purchasing managers index rebounded in July to 51 from a 10-month low of 48.2 in June, as factory orders remained steady, Kagiso Tiso Holdings Ltd. said on Aug. 1. An index level above 50 indicates an expansion in factory output.