S. Africa Manufacturing Climbs as Strike Effect WanesMike Cohen
South African manufacturing unexpectedly accelerated for a second month in November as production rebounded following the settlement of a series of mining strikes.
Factory output rose 3.4 percent, compared with a revised 2.7 percent in October, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of eight economists was 1.1 percent. Output rose 2.3 percent in the month.
Pay strikes that began in platinum mines in August spread to gold, coal and iron-ore operations, with about 120,000 workers downing tools at the peak of the unrest, according to the Chamber of Mines. Labor action also disrupted transportation and agriculture. The mining strikes began tailing off in October as pay settlements were reached.
“Despite the improvement towards the end of 2012, the trading environment will remain challenging in 2013,” Nedbank Group Ltd., South Africa’s fourth-largest bank said in e-mailed note to clients. “A weak euro-zone will continue to hurt the large export-orientated industries. The long-term pressure on manufacturers providing goods to the local consumer markets will also persist as consumer spending remains moderate and highly price-sensitive, favoring competitively priced imports.”
The 17-nation euro-area economy will probably shrink 0.3 percent this year, the European Central Bank said on Dec. 6. The area buys about a third of the South Africa’s manufactured exports.
The rand traded at 8.6187 per dollar at 4:17 p.m., down from 8.6085 before the release of the manufacturing data. The yield on the R208 bond, due 2021, rose 2 basis points to 6.32 percent today.
“Our manufacturing is still not out of a longer-term slump,” Mike Schussler, chief economist at independent research group Economists.co.za, said in a phone interview from Johannesburg before the release of the data. “We’ve got a severe problem to get the production side of our economy, including manufacturing and mining, going.”
The central bank held its benchmark repurchase rate at 5 percent on Nov. 22, the lowest level in more than 30 years, after a surprise cut on July 19 to stimulate the economy. South Africa’s gross domestic product will expand 2.5 percent this year, according to the bank. The bank’s money policy committee will announce its next interest rate decision on Jan. 24.