Johannesburg - South Africa's September manufacturing output beat expectations of a second successive contraction, rising sharply on Tuesday, largely after electricity supply stabilised over the period.
Manufacturing output rose 0.9 percent year-on-year in September compared to a revised -0.3 percent in August, Statistics South Africa said, beating the 2 percent contraction predicted by a Reuters poll of economists.
On a month-on-month basis, factory production jumped 2.2 percent, and was up 1.4 percent in the three months to September compared with the previous three months.
South Africa's rand currency has weakened to a record low, pressured by investor bets of a December rate by the Federal Reserve intensified.
“Not a bad manufacturing print at all. It may be that both the more competitive rand, and stabilisation of power, helped,” head of Africa research at Standard Charted Razia Khan said.
In the last two quarters of the year economic activity, particularly manufacturing which accounts for about 13 percent of GDP, has been battered by severe electricity shortages with state utility Eskom's ageing fleet of coal-powered stations buckling under increased demand.
Eskom has, however, managed to avoid implementing countrywide power cuts for over 90 days.
“Today's figures paint a less negative picture of South Africa's economic health than is widely assumed. We believe that these signs of life will increase the SARB's willingness to hike rates to 6.25 percent next week,” Africa analyst at Capital economics John Ashbourne said.
South Africa's Reserve Bank (SARB) last lifted lending rates in July, but is poised to lift them again next Thursday in anticipation of tightening by the US Federal Reserve.
REUTERS