(Adds details, analyst comment)
JOHANNESBURG, April 11 South Africa's
manufacturing output plunged in February as a sustained slump in
consumer and business confidence hit the economy's second
biggest sector, raising worries of a recession.
Continued signs of weak growth could strangle economic
activity and trigger further credit downgrades after last week's
moves by S&P Global Ratings and Fitch to label South African
bonds as "junk" after Jacob Zuma fired his finance minister.
Growth shrunk 0.3 percent in the final quarter of 2016 and a
second consecutive contraction in the first quarter of 2017
could see the continent's most industrialised economy slip into
technical recession for the first time since the 2008-2009
global crisis. First quarter growth data is due in early June.
Statistics South Africa said on Tuesday that manufacturing
output shrunk 3.6 percent year-on-year in February and 0.4
percent on monthly basis.
The largest contractions were seen in the petroleum and
furniture categories, which fell 4.4 percent and 4.2 percent
respectively, according to the data.
"This is very disappointing, and it comes when other sectors
like retail are also struggling," said Kevin Lings, chief
economist at Stanlib. "If it weren't for the improved
agricultural numbers the economy would definitely be facing
recession," he said.
A South African Chamber of Commerce and Industry index last
week showed business confidence continued to retreat in March as
rising political tension and a sliding currency weighed on
sentiment. Consumer confidence also remains deep in negative
In March, the central bank estimated growth of 1.2 percent
in 2017. But on Monday, it said it would likely revise its
estimates downwards on the back of political wrangling and
Governor Lesetja Kganygo said while it was too early to know
if a recession was imminent, rising capital costs due to the
downgrades would force businesses to rethink any new
(Reporting by Mfuneko Toyana; Editing by James Macharia and Tom