Statistics South Africa said on Wednesday manufacturing output rose by 6.3 percent year-on-year in volume terms in March, accelerating from 2.7 percent in February, much higher than the 2.9 percent expected by economist in a Reuters poll.
On a monthly basis, factory production in volume terms rose by a seasonally-adjusted 2.6 percent in March and increased by 1.5 percent in the first quarter of 2010 compared with the fourth quarter of 2009.
The data comes as the central bank's monetary policy committee is deliberating on interest rates, with its decision due to be announced on Thursday around 1300 GMT.
The central bank surprised with a 50 basis point repo rate cut in March to a three-decade low of 6.5 percent to support weak local demand that threatens to derail the pace of an economic recovery after last year's recession.
The rate reduction added to 500 basis points worth of cuts between December 2008 and August 2009.
Twenty-two of the 25 economists polled by Reuters last week expected the central bank to leave rates unchanged.
Reserve Bank Gov. Gill Marcus said last month rates were seen stable for "some time" - her clearest signal yet on policy direction before a rates meeting.
Analysts said the manufacturing output figures backed the case for leaving interest rates unchanged.
"(The manufacturing data) suggest that growth picked up further in the first quarter of this year. We expect no change tomorrow in (interest rate)," said Isaac Matshego, economist at Nedbank.
"If the numbers continue to increase at this pace, that would mean we have seen the last of the rate cuts," he added.
The manufacturing sector is a key contributor to economic growth and helped the biggest economy in Africa exit its first recession since 1992 in the third quarter of last year.
The rate of economic growth increased to 3.2 percent in the fourth quarter, compared with 0.9 percent in the third quarter.
The rand was steady at 7.7130 against the dollar at 1115 GMT from 7.7110 before the data was released at 1100 GMT.
The yield on the 2015 bond was at 8.025 percent from 8.02 percent before the data.
Meanwhile, South Africa's central bank wants proposed changes to shareholding rules in the institution to come into effect by August, a Treasury official told a Parliament hearing on Wednesday.
Gov. Marcus told the same hearing the bank may need to postpone a scheduled annual general meeting in September if Parliament does not fast-track new amendments to the Reserve Bank Act.
Officials said the Reserve Bank policy committee, which sets interest rates, adjourned its meeting while Marcus attended the parliamentary briefing.
Finance Minister Pravin Gordhan last week announced proposed amendments to tighten rules on shareholding in the central bank to try to stop private shareholders the government says are motivated by profit, from undermining the bank's independence.
He wanted Parliament to fast-track the new law.
On Wednesday Rebecca Tee, chief director for legal services at the Treasury, said it was important for the proposed amendments to be promulgated by August, ahead of the bank's AGM.
Parliament needs to approve the rules before President Jacob Zuma signs them into law.
"The bank has made it very clear they would not want to change the date, possibly because they could be open to attack by shareholders again," Tee said.
Marcus said the annual meeting might have to be delayed.
"Obviously, the AGM might need to be postponed but we would really appreciate Parliament's work to enable us not to do that," Marcus said.
South Africa's Reserve Bank is one of the few central banks in the world owned by private shareholders, a system originally meant to give ordinary South Africans a chance to own a small number of shares.
Shareholders have no say in the operations of the central bank or monetary policy but a small group have bought shares in family and friends' names, circumventing shareholding limits, to try to gain more votes and influence.
They regularly disrupt Reserve Bank general meetings, using time-wasting tactics to press their demands, which the central bank and government say is, ultimately, to ensure bigger payouts.
