Factory output rose for the first time in 14 months in December, raising hopes that SA's economy is on track to recovery. Manufacturing output grew by 3,2% y/y, from a drop of 4,6% previously. The increase was supported by higher production of export-orientated goods.
Seven out of 10 categories recorded growth in December. Most notably, output in the motor vehicles & parts industry rose by 11,3% y/y. The strong increase in production in December boosted output figures for the entire fourth quarter, which increased by a seasonally adjusted 3,4% q/q, up from 2,8% in the third quarter and a decline of 2,9% in the second quarter. For the whole of 2009, production was down 12,5% y/y.
The first half of 2010 is still expected to be challenging. Manufacturers are confronted by weak demand, as well as an uncompetitive, strong rand. A more sustained improvement is expected in the second half of the year. However, high electricity tariff increases may reduce the sector's competitiveness, says Investec economist Kgotso Radira.
The upward trend is confirmed by Kagiso's purchasing managers' index, which increased to 53,6 points in January.
Razina Munshi
2,7 percent y/y. The Bureau for Economic Research forecasts that the economy will grow by as much as 2,7% this year, well above the official estimate of 1,5%. Growth in 2011 is projected to rise 3,5%.
44 points. Sacci's trade activity index, which reflects trade conditions, rose two points in January after declining sharply to 42 points in December from 51 in November. It remains in negative territory (below 50), but is expected to increase this year.
244 billion rand. Raising affordability concerns, Econex research shows government will have to cough up as much as R244bn/year, over and above the money it already spends on public health, to fund the proposed National Health Insurance.
The price of gold has increased steadily, after European leaders indicated they would help to alleviate Greece's debt crisis. Greece posted a budget deficit of 12,7% of gross domestic product in 2009. The precise measures to be taken by the EU remain vague and European leaders met earlier this week to try to come to an agreement on how they intended to rescue Greece. Coming into this week, the price of gold jumped above US$1 100/oz as concerns about the global recovery continued to enhance the appeal of gold.
Brent crude has been trading in a range of US$72/bbl to $73/bbl as a stronger dollar and concerns about the outlook for the global recovery continue to weigh on prices. Last Friday, the People's Bank of China raised its bank reserve requirement ratio (from 16 % to 16,5%) after lending activity in the Asian economy increased considerably in January and property prices climbed by their highest percentage in 21 months. This sparked concern that monetary tightening may undermine the pace of the global economic recovery.
According to Stats SA, SA total mining production fell 2,5% in December, dragging annual mining production down 6,7% in 2009 (following a decrease of 5,6% in 2008). The major contributors to the fall were a sharp drop in the production of diamonds (contributing -3,5 percentage points) and lower gold output. The slump in the global economy led to a drop in demand.
Ranking the Analysts 2009
