The Pretoria-based statistics agency said South Africa's physical volume of manufacturing rose 6.3% year-on-year (y/y) in March after an increase of 2.7% in February.
The increase was mainly due to higher production in the motor vehicles, parts and accessories and other transport equipment division (24.3% and contributing 2.2 percentage points), the basic iron and steel, non-ferrous metal products, metal products and machinery division (9.5% and contributing 1.9 percentage points).
Other areas of higher production were in the petroleum, chemical products, rubber and plastic products division (7.6% and contributing 1.8 percentage points), the food and beverages division (6.3% and contributing 1.1 percentage points) and the electrical machinery division (5.6% and contributing 0.2 of a percentage point.)
Meanwhile, the estimated total value of sales of manufactured products at current prices for the first quarter of 2010 increased by 2.5% (R7.383 billion), after seasonal adjustment, compared with the fourth quarter of last year.
Higher manufacturing sales were reported by six of the ten manufacturing divisions.
The figure came as a surprise to most economists who had forecast a 3.1% rise.
"The figures were very surprising and shocking. We were the lowest with a forecast of 2.7% and I think most analysts were caught off guard," said Freddy Mitchell, economist at Efficient Group.
"Trade figures show that we recorded a surplus of almost R500 million in March, telling us that countries abroad are demanding more of our goods," added Mitchell.
Nedbank economist Isaac Matshego shares Mitchell's views.
"A very strong number indeed. It seems that the export driven recovery continued. It's evident that it remains an export driven recovery.
"With the improving global economy and higher PMI (Purchasing Managers' Index) numbers we expect the sector to continue benefiting from that."
Jeffrey Schultz, economist at Absa Capital said: "A very nice figure coming out, providing evidence that momentum in the manufacturing sector is very strong.
"The quarter-on-quarter numbers really show us that manufacturing productivity is performing at the moment. Also PMI indices are still well above neutral levels."
There's sentiment that the better-than-expected March manufacturing data will bode well for yet-to-be-announced first quarter Gross Domestic Product (GDP) figures. GDP grew by 3.2% in the last three months of 2009.
"During the three month period from January to March, manufacturing activity rose by a solid 1.5% quarter-on-quarter after a very disappointing start to the year. This will obviously have a positive impact on the Q1 2010 estimate of SA GDP," said Kevin Lings, economist at Stanlib.
On international developments, especially with a multi-billion Euro bailout package for the deeply indebted Greece, there remains the biggest challenge to the sustainability of the momentum in the manufacturing sector, according to analysts.
"We have to be cautious because of the Greece eurozone factor. We have to keep an eye on international developments. If demand is not sustained, we may see manufacturing declining a bit," said Mitchell.
"The happenings in Greece could have a negative implication for demand and economic activity globally," remarked Matshego.
Lings added his concerns: "Manufacturing activity is out of recession, but the stability/improvement remains a little fragile given that final consumer demand remains under pressure. ...A sustained rise in output is heavily dependent on a more convincing increase in domestic final demand."
The manufacturing figures are not expected to have any implications on interest rates. A decision on the rates is expected on Thursday afternoon.
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