JOHANNESBURG, Oct 11 (Reuters) - South Africa'smanufacturing output beat market expectations in August, growingby 3.0 percent year-on-year in volume terms compared with arevised 6.3 percent rise in July, data showed on Thursday.
On a month-on-month basis production rose by a seasonallyadjusted 3.0 percent and grew by 0.9 percent in the three monthsto August compared with the previous quarter, Statistics SouthAfrica said.
Economists polled by Reuters earlier this week expected a 1.1percent year-on-year contraction in August.
ANALYST COMMENT NICKY WEIMAR, SENIOR ECONOMIST, NEDBANK
"The challenges remain exactly the same, I don't think thelatest statistics changed that at all.
"You still have an economy that is growing quite moderately,and areas of the economy are under very definite stress,especially mining production. Consequently, there's still a lotof downside risk to growth no matter how you look at it.
"We've got the challenges of the strikes in the short termand over the longer term we have a world economy that remainsquite constrained and damaged.
"Right now, the Reserve Bank is likely to stay with interestrates unchanged, but warn of the risk of a weaker rand, highcommodity prices on inflation in the future."
SALOMI ODENDAAL, ECONOMIST, CITADEL
"Under the circumstances it's a positive number because themanufacturing sector is having quite a difficult time as aresult of the depreciation especially in Europe and also localdemand that remains rather lacklustre.
"We expect the manufacturing sector to keep growing, but ata fairly slow rate. We don't expect any sharp pick-up in growth.
"We don't think there will be any change in interest ratesunless there is some really negative happenings globally thatwill have some real negative impacts on South Africa - thelabour strife adds uncertainty - but at the moment we don't seeany change in the short term."
CHRISTIE VILJOEN, ECONOMIST, NKC INDEPENDENT ECONOMISTS
"The month on month number looks good, which can helpexplain why the year on year growth is better than expected.
"This was definitely not expected considering the problemsin the mining sector that started in August would have had animpact in manufacturing as well.
"In the past three months production increased 0.9 percentfrom the preceding three months. We should take that as apositive considering all the negative international news that'stelling us that the exports aren't doing that well and thatexports might affect consumer confidence."
MARKET REACTION
The rand weakened to 8.7301 against the dollar at1130 GMT from 8.6969 before the data was released at 1100 GMT.
The yield on the three-year bond edged up to 5.41percent from 5.405 percent and that for the 14-year bond
ticked up to 7.715 percent from 7.71 percent.
BACKGROUND
- The manufacturing sector contributes about 15 percent ofgross domestic product and is key for creating employment in aneconomy with an official jobless rate of about a quarter of thelabour force.
- Output increased by 2.5 percent in 2011, only half of theexpansion seen in 2010, Statistics South Africa data shows.
- South Africa plans to spend 5.8 billion rand over the nextthree years to help manufacturers affected by the globaleconomic downturn upgrade their factories, improve products andtrain workers.
(Reporting by Tshepo Tshabalala and Xola Potelwa)
((xola.potelwa@thomsonreuters.com)(+27 11 775 3098)(ReutersMessaging: xola.potelwa.thomsonreuters.com@reuters.net))
Keywords: SAFRICA MANUFACTURING/