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.
“This will go a far way in calming the fears that GDP growth is faltering,” Ilke van Zyl, an economist at Vunani Securities (Pty) Ltd., said by phone from Johannesburg. “This should put the Reserve Bank in a comfortable position to have an unchanged stance.”
The currency declined 11 percent against the dollar in May and has dropped 18 percent this year, making exports cheaper for buyers. The Reserve Bank cut its forecast for growth last month as gross domestic product growth rate fell to the lowest in the first quarter since a 2009 recession. 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 from 2.1 percent 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 weakest pace since the recession.
The monthly rebound in manufacturing in April was partly because of a resumption of output at ArcelorMittal South Africa Ltd.’s Vanderbijlpark plant, Van Zyl said. The company declared force majeure after a Feb. 9 fire and resumed full production the second week of April.
There were fewer holidays in April compared to the same month last year, the statistics agency said.
The rand pared its losses after the data was released and was 1.1 percent weaker at 10.2976 per dollar at 1:30 p.m. in Johannesburg. The yield on the rand bond due in March 2021 rose 20 basis points to 7.80 percent.