South Africa's economic growth came in higher than expected in the fourth quarter, boosted by stronger growth in the mining and agricultural sectors, according to data released on Tuesday.

Statistics South Africa said the economy grew by 4.4 percent in the fourth quarter on a seasonally adjusted and annualised basis, compared with an upwardly revised 2.7 percent expansion in Q3. The market was expecting a 4.2 percent rise.

The rand currency firmed after the data as the market grew more certain that the central bank's rate cutting cycle was over.

On an unadjusted year-on-year basis, the economy expanded by 3.8 percent from a revised 2.7 percent in the third quarter, also above a consensus of 3.5 percent.

The statistics agency said South Africa's GDP increased by 2.8 percent in 2010, after a 1.7 percent contraction in 2009.

We are now comfortably out of a recession but we are in an area where several things need to take place for the economy to really lift off, said Rashad Cassim, Deputy Director General of economic statistics at Stats SA.

Agriculture and mining grew by 12.5 percent and 17.1 percent respectively while manufacturing returned to growth with a 4.1 percent rise after a 5.0 percent contraction in the third quarter.

JOB CREATION WILL BE TOUGH

The wholesale, retail trade showed a 3.5 percent growth compared to 3.3 percent in the third quarter, pointing to a steady recovery in spending.

We can see the recovery is still uneven with trade strongest, then consumption and investment taking up the rear, said Peter Attard Montalto, emerging market analyst at Nomura.

Overall we would say this would confirm rates left on hold and be a touch stronger than SARB was originally looking for, he added.

The Reserve Bank has cut interest rates by a cumulative 650 basis points to a historical low of 5.5 percent since December 2008, in an attempt to boost growth in Africa's largest economy.

Consumer spending makes up about a third of the economy, and after the recession shed more than a million jobs, households spending is recovery slowly.

The Bank said in January it expected GDP to average 3.4 percent in 2011, a bit lower than January Reuters Econometer consensus of 3.53 percent this year and 4.22 percent by 2013.

The government has said it needs the economy to grow by between 6 and 7 percent a year, to make a dent on unemployment.

President Zuma promised job-creation will top his cabinet's agenda as citizens prepare to vote in local elections in the next few months, but analysts say it will be tough.

You will see a marginal improvement in the labour market but the reality of this recovery is that it's subdued, said Nicky Weimer, senior economist at Nedbank.

Job-creation depends on investment and that's not happening right now because most companies don't expect this recovery to be robust and there's also uncertainty about where policy is going, she said citing mining.

The mining sector -- a major employer in the continent's biggest economy -- faces an uncertain regulatory environment with regards to mining rights which analysts say will derail investment in the sector.

The rand was trading at 7.1935 against the dollar at 1049 GMT, from 7.2140 before the data was released at 0930 GMT. The yield on the 2015 government bond was at 7.765, from 7.77 percent prior.

Retail Gdp Unemployment Manufacturing