South Africa’s manufacturing sector output showed a much stronger-than-expected rebound in September, expanding by 8.0% y/y in volume terms, a rate last seen in September 2011, preliminary data from Statistics South Africa showed. The increase came after a revised 1.0% y/y decline in August and an 8.2% drop in the strike-hit July, and was attributed mainly to a 121.6% y/y surge in the production of the automotive sector, which was hit by industrial action in September 2013.

On a seasonally adjusted monthly comparison basis, factory output rose 4.0% in September, accelerating from a 2.6% growth in August, indicating that the industry’s recovery after the devastating labour auctions in the first seven months of the year has been gaining speed.

Economists, polled by Reuters, had forecast, on average, a 5.1% y/y contraction and a 1.55% m/m expansion.

The automotive sector contributed 5.8pps to the overall 8% y/y manufacturing output growth. The production of motor vehicles, parts and accessories and other transport equipment rose 8.6% from August, when it posted a 31.7% y/y growth and contributed 2.3pps to the overall development.

The food and beverages manufacturing industry was also a large positive contributor to the overall y/y output increase, recording a 6.1% y/y growth and contributing 1.6pps.

The Q3 seasonally adjusted manufacturing production narrowed by 1.3% q/q, with 5 of the 10 manufacturing divisions reporting declines. It was by 0.6% lower y/y. For the first nine months of the year, factory output fell 0.3% y/y.

The total sales of manufactured products at current prices surged 15% y/y to ZAR161.4bn ($14.3bn) in September, accelerating from an 8.3% y/y growth in the previous month, Statistics South Africa said. On a seasonally adjusted basis, manufacturing sales rose 2.0% m/m in September. In Q3, sales were 0.3% higher q/q.

The manufacturing industry, which accounted for 11.1% of South Africa’s total economic output, shrank 2.1% q/q in Q2 after a 4.4% q/q contraction in Q1, reflecting lower production in the food, petroleum, automotive, and glass and non-metallic mineral sectors. While the output data suggests the contraction might have continued in Q3, the sector is likely to recover during the last quarter of the year given the resolution of labour disagreements. This expectation is supported by recent purchasing managers’ surveys that point at a strengthening recovery of economic activity and improving expectations.