S African manufacturing sector shrinks for second month in November
09 Jan 2009
South Africa's manufacturing output shrank for the second consecutive month in November last year as the hefty interest rate reductions failed to restore consumer confidence and boost factory output.
The country's manufacturing output, which fell 1.8 per cent year-on-year in October last year (revised from the earlier published 3.0 per cent), fell 4.4 per cent in November, Statistics South Africa said in a release.
Production volumes in November fell 3.0 per cent compared with October as growth in Africa's biggest economy slowed amidst the global economic downturn.
The economy recorded the lowest growth in a decade of 0.2 per cent in the third quarter of 2008 even as manufacturing output fell to 3.1 per cent. Manufacturing is the second biggest sector, contributing around 17 per cent of gross domestic product of South Africa.
The market expects the central bank, which cut key interest rate by 50 bps in December, to cut rates by a further 100 basis points now. The Reserve Bank of South Africa is expected to cut its repo rate from 11.5 per cent to 10.5 per cent now.
The South African currency rand and government bonds, however, remained unchanged.
Economists expect the South African economy to grow at an average between 0.5 per cent and 1 per cent, respectively - very close to a recession.
The downtrend has so far not affected the finance, real estate, business services, construction, transport, storage, communications and agriculture sectors.
