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Factory output stalls in March

Johannesburg - Growth in South Africa’s manufacturing output slowed to 4.6% year-on-year (y/y) in volume terms in March compared with a downwardly revised 5.7% expansion in February, Statistics South Africa said on Wednesday.
 
A Reuters poll last week showed a consensus of a 4.1% y/y increase in output.

Compared with February, production in volume terms rose by a seasonally adjusted 1.6% in March and by 4.0% in the three months to March, compared with the previous three months.

Peter Attard Montalto, emerging market economist at Nomura, said the figure was an "upside surprise".

"Overall though, in line with the strong run of export numbers, we are seeing softer domestic business demand for manufacturing output."

He said the data showed that manufacturing - South Africa's second-largest sector - was still not showing the same level of momentum it did before the recession.

The rand was a touch softer at R6.7690/$ from R6.77650/$ before the data was released.

Factory production contributes about 16% to gross domestic product, but recovery has been tentative after a contraction in 2009 that pushed the country to its first recession in nearly two decades.

The central bank said at its March meeting the sector was still underperforming and production levels were not at pre-recession levels yet.

The purchasing managers’ index - a key indicator of industrial activity ahead of official data - edged lower to 56.4 in April, from a 13-month high of 57.2 in March.
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