Manufacturing on two-year high
22 October 2004
A stronger rand and buoyant consumer spending is spurring on the manufacturing sector. According to analysts, conditions in the sector are now as good as they were in 2002.
The recovery of manufacturing production helped to lift South Africa's gross domestic product (GDP) by 3% in the first six months of 2004. While two years ago it was favourable export conditions, this time around it is domestic demand spurring on growth.
South Africa has developed an established and diversified manufacturing base that has demonstrated resilience and the potential to compete in a global economy.
The sector provides a locus for stimulating the growth of other activities, such as services, and achieving specific outcomes, such as employment creation and economic empowerment.
Manufacturing in the country is dominated by motor vehicle assembly, chemicals, textiles, electronics, metals and foodstuffs.
According to Investec's PMI (Purchasing
Managers' Index), which measures manufacturing activity, the sector rose to 59.1 points in September from 58.8 points in August.
Production has been recovering after two years of stagnation brought on by the rand's 24% strengthening against the US dollar, which made local products more expensive on global export markets, especially in the US.
South African firms seem to have come to terms with the rand and are now boosting output.
The expansion in local industrial production has been boosted by shopping demand, afforded by the low interest rates. Car, food, beverage, furniture and appliance manufacturing are the main areas of growth.
SouthAfrica.info reporter. Source: Proudly South African
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