Factory output below target

ANNUAL manufacturing output rose less than expected in February, highlighting the fragility of an economic recovery as local demand remains weak.

ANNUAL manufacturing output rose less than expected in February, highlighting the fragility of an economic recovery as local demand remains weak.

Stats SA said yesterday February's output rose by 2,7percent year-on-year in volume terms compared with a downwardly revised 3,5percent in January. The print was much lower than the consensus of 4,7percent in a Reuters poll.

On a monthly basis, factory production fell by a seasonally-adjusted 1,5percent in February and was up 2,7percent in the three months to February compared with the previous three months.

Manufacturing, a key contributor to economic growth, was one of the sectors hit the hardest by the global slowdown and helped drag the local economy to its first recession since 1992 last year.

The economy came out of the recession in the third quarter and quickened the pace of recovery in the fourth quarter.

In the Reuters Econometer published earlier yesterday, many analysts were not expecting the central bank to cut interest rates further this year, with the repo rate seen at a median 6,47percent by year-end. - Reuters

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