June 11, 2019 / 12:10 PM / 6 months ago

UPDATE 1-South Africa's manufacturing jumps to best in over 2 years as power woes ease

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JOHANNESBURG, June 11 (Reuters) - South Africa’s manufacturing grew much more than expected in April as production of cars, electronics, metal products and furniture jumped, providing the first glimmer of hope for an economy mired in contraction and policy uncertainty.

Manufacturing output in Africa’s most industrialised economy expanded by 4.6% year-on-year in April, the biggest growth since June 2016, Statistics South Africa said on Tuesday, in the first positive data since a May vote returned President Cyril Ramaphosa to office.

Analyst surveyed by Reuters had forecast a modest expansion of 1.35%.

Production of motor vehicles soared by 18.6%, electrical machinery jumped 12.2% and the basic iron and steel category saw 9.4% growth. Only clothing and footwear showed a contraction.

The economy shrunk 3.2% in the first quarter, data showed last week, with those shock figures followed by a squabble between government officials and the ruling African National Congress over the mandate of the central bank, dragging the currency to a 1-year low.

Nationwide power outages, known as load-shedding, by ailing Eskom at the start of the year, battered manufacturing and mining. But since March blackouts have eased after the government poured billions of rand in emergency funding into the utility.

“The biggest factor was load-shedding and now you have some normalisation. It’s the heavy energy users that have contributed the most. So we can anticipate a recovery, but it won’t be impressive growth,” said Nicky Weimar, a senior economist at Nedbank.

The data barely moved the rand which traded steady at 14.7800 per dollar at 1120 GMT. Bonds were soothed, with the yield on 10-year government issue down 6 basis points.

“We don’t foresee a recession this year. But the consumer spending will continue to struggle, especially with the conflicting messages coming from government and the ANC about economic policy,” Weimar said.

Stats S.A. publishes April retail sales data on Wednesday at 1100 GMT. (Reporting by Mfuneko Toyana; Editing by Catherine Evans and Andrew Cawthorne)

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