Manufacturing production in South Africa rose by 1.9 percent in February year-on-year compared to a decline of 2.6 percent year-on-year in January, Statistics South Africa (StatsSA) said on Thursday.
According to Kamilla Kaplan, an economist at Investec, the February outcome exceeded market expectations of a 2.1 percent year-on-year contraction.
StatsSA said the increase in manufacturing production was underpinned by the petroleum, food and wood manufacturing sectors, where production increased by 4.2 percent, 3.8 percent and 4.7 percent year-on-year respectively.
These sectors jointly comprise nearly 60 percent of the manufacturing sector.
“In terms of the measure that is used to calculate growth domestic product (GDP), the manufacturing sector contracted by 1.1 percent on a seasonally adjusted annualised basis,” Kaplan said in a statement.
As such, Kaplan said it was still likely that the sector will detract from Q1.16 GDP.
Kaplan said based on recent comments by rating agency Standard and Poor’s, South Africa’s economic growth performance underpins the sovereign credit rating.
“The rating agency assessed that an improvement in SA’s rating outlook would require the implementation of polices and reforms that strengthen business confidence, resulting in higher rates of fixed investment and therefore GDP growth” Kaplan said.