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South African manufacturing output accelerates
The South African manufacturing output has quickened in June, adding to evidence of a recovery in the key sectors and suggesting that rising interest rates would not dampen growth in the economy. Production rose by an unadjusted 6,1% in volume terms in the year to June, accelerating from an upwardly revised increase of 5,6% in May, data from Stats SA has showed.
This followed a decision by the Reserve Bank of South Africa to raise its key interest rate by half a percentage point to 8,0% in June — the first rate hike in about four years. "The fact that the manufacturing sector is still growing raises confidence to increase interest rates," said Citadel economist Dave Mohr.
"That, plus the fact that domestic demand is still growing, further strengthens the case that we will see further interest rate increases in the coming months." Faster economic growth over the past couple of years has been driven mainly by surging domestic demand, which rocketed by 14,5% in the first quarter of this year. It has also driven household debt to record levels.
Compared with May, manufacturing production in volume terms rose by a seasonally adjusted 1,7%, Stats SA said. In the three months to the end of June, manufacturing volumes rose by 1,5% compared to the previous quarter, also on a seasonally adjusted basis. The domestic markets did not react to the
data.
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