THE manufacturing sector shocked analysts with its widespread dismal performance in December but there are signs that the sector, which provides about 15% of SA's annual gross domestic product, will be more tenacious this year.

Manufacturing production grew by a measly 0,2% in December last year compared with the same month the year before, Statistics SA data showed yesterday .

This was "extremely disappointing" given "some improvement in growth momentum during October and November", Stanlib economist Kevin Lings said yesterday. A Bloomberg consensus of economists had expected 3,8% year-on-year growth in December.

Manufacturing production grew 4,6% year on year in November.

"While the sharp slowdown in the annual rate of change is partly due to base effects, it is clear that manufacturing activity lost momentum at year-end," Mr Lings said.

The lack of joy in December was largely due to a fall in motor vehicle production, a category that had fared well in the two previous months and buoyed manufacturing figures, but failed to bail out other manufacturing sectors in December.

The weakness in December was broad-based, with only three of the 10 major manufacturing subsectors making a positive contribution to overall output. The major contribution came from the motor industry.

"In fact, without the growth in vehicle sales, the manufacturing sector would have had a dismal final quarter of the year," Mr Lings said.

Manufacturing has exited the recession but it remains fragile as many key infrastructure projects have ended and there have been few private-sector investment projects.

But Citadel economist Dave Mohr said yesterday that he was not concerned about the sector's poor December results, partly because November had seen impressive year- on-year production growth and the sector had actually "not lost momentum" in his opinion.

"The manufacturing figures tend to be volatile on a monthly basis. November and December's figures combined look better than September and October's," Mr Mohr said.

"The weak December figures do not indicate that the economy's recovery has been derailed, and manufacturing has had strong investment demand despite the strong rand."

He noted that the purchasing managers index (PMI) had forecast "promising" manufacturing production numbers for last month .

The PMI reflects the percentage of purchasing managers in an economic sector who reported better business conditions in one month than in the previous month. It is considered a reliable indication of the manufacturing sector's health.

But the sector was still struggling to compete with European manufacturers, with the weaker euro currency making their exports more competitive, Mr Mohr said.

Meanwhile, mining production in December saw a year-on-year rise of 12,2%, data released by Statistics SA showed yesterday . For the fourth quarter of last year , mining production grew 9,5% compared with the corresponding period in 2009.

andersona@bdfm.co.za