South African Economic Growth Increases to 4.4% on Manufacturing Expansion

South Africa’s economic growth accelerated in the fourth quarter as mining and manufacturing rebounded and interest rates at a 30-year low spurred consumer spending.

Gross domestic product expanded an annualized 4.4 percent from the third quarter, when it grew a revised 2.7 percent, the statistics office said in a report released in Pretoria today. The median estimate of 21 economists surveyed by Bloomberg was for growth of 4.2 percent.

Manufacturing, which accounts for 15 percent of the economy, returned to growth in the final three months of last year as carmakers boosted output after strikes disrupted production in August and September. The Reserve Bank cut its benchmark interest rate three times to 5.5 percent last year to support consumer spending in Africa’s biggest economy.

“Firmer global demand and surging international commodity prices should support both the local mining and manufacturing sectors,” economists at Johannesburg-based Nedbank Group Ltd. said in an e-mailed note to clients today. The figures “are encouraging, suggesting that the recovery is no longer confined to spending but also supported by a relatively robust rebound in production.”

The rand strengthened to 7.1741 against the dollar as of 1:46 p.m. in Johannesburg from 7.2183 before the data was released. The yield on the R157 government bond, which matures in September, 2015, rose 1 basis point, or 0.01 percentage point, to 7.77 percent.

‘Comfortable, Moderate’

Manufacturing rose an annualized 4.1 percent in the fourth quarter, while the retail trade industry grew 3.5 percent, the statistics office said. Mining output surged 17 percent as production of platinum and other metals climbed, while agriculture grew 13 percent, the agency said.

The economy expanded 2.8 percent in 2010, the statistics office said. The central bank expects growth to average 3.4 percent in 2011 and 3.6 percent in 2012.

“We’re in comfortable, moderate growth territory,” Rashad Cassim, deputy director general of the statistics office, told reporters in Pretoria today. “One may be seeing the effects of some loosening up of monetary policy.”

The growth rate is still short of the 7 percent the government says it needs in order to create 5 million jobs by 2020 and slash the unemployment rate to 15 percent. South Africa’s jobless rate of 24 percent is the highest of 61 countries tracked by Bloomberg.

“The South African recovery has been relatively hesitant,” central bank Governor Gill Marcus said on Feb. 4. “However, recent indicators are more positive and suggest that the recovery will be sustained, and we can look forward to more vibrant growth in the coming years. But significant challenges remain.”