Bloomberg reported that South African manufacturing contracted at a faster pace in August, dropping an annual 15% in a sign the economy may be slow to recover from its first recession in 17 years.

Pretoria based Statistics South Africa said that the decline accelerated from a revised 13.5% in July. The median estimate of 10 economists surveyed by Bloomberg was for a drop of 11.5%. Output slid a seasonally adjusted 2.8% in the month.

The rand's 40% surge against the dollar in the seven months through September may be undermining a recovery in manufacturing by making exports more expensive. Manufacturing accounts for 14% of the economy and a faster contraction in output will be a further drag on gross domestic product, which shrank an annualized 3% in the second quarter.

Mr Monale Ratsoma economist at Thebe Securities Limited in Johannesburg said that "It's going to be a very, very slow recovery. It calls for patience in announcing that we are in total recovery mode. We may see a sharper improvement in the numbers in September."

The statistics office said that production of motor vehicles plunged 14.6% MoM in August from the previous month. A slump in global demand has crimped car exports, which fell an annual 49.3% in September and a record 66.7% in August.

The Purchasing Managers Index rose the most in 17 months in September. Confidence amongst manufacturers also doubled in the third quarter as a global recovery helped to boost demand for steel, iron and other metal products.

(Sourced from www.bloomberg.net)