UPDATE 1-S.Africa's Feb manufacturing up as demand rises

Wed Apr 11, 2012 12:01pm GMT

* Growth exceeds analysts expectations

* Data points to rising domestic demand

* Rand firmer after data release (Adds details, comment, reaction)

JOHANNESBURG, April 11 (Reuters) - Growth in South Africa's manufacturing output outpaced expectations in February, adding to signs that domestic demand is recovering and backing the case for higher interest rates.

Factory output grew by 4.1 percent year-on-year in volume terms in February from a revised 2.3 percent in January, Statistics South Africa said on Wednesday. Economists in a Reuters survey expected growth of 2.0 percent.

On a month-on-month basis, production in volume terms grew by a seasonally adjusted 2.8 percent. It expanded 1.6 percent in the three months to February compared with the previous three months.

The manufacturing sector contributes about 15 percent of gross domestic product and is a major creator of jobs for the largely unskilled labour force in the country where unemployment has languished for years at around 20 to 25 percent.

"It's a really good number, especially since the manufacturing numbers have had trouble building up steam," Efficient Group economist Merina Willemse said.

"It shows a promising growth in this industry, supporting perhaps a more optimistic economic figure."   Continued...

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