South African
manufacturing activity contracted for the seventh month in a row in August, but at a slower pace than in the previous month. In August, the seasonally-adjusted Absa Purchasing Managers’ Index (PMI) increased to 49.7 points, up from 47.3 points in July. However, it remained below the critical 50-point threshold that distinguishes expansion from contraction.
The business activity sub-index experienced a significant increase of nearly 12 points in August, effectively reversing the steep decline of almost 11 points observed in July. However, the sub-index still pointed to flat month-on-month manufacturing production.
The South African bank Absa, which sponsors the PMI survey, said in a statement that output constraints in August included rolling power cuts and the Western Cape taxi strike.
The statement noted that there were reports suggesting that a number of manufacturing facilities were affected by worker absenteeism linked to the strike.
The strike
, which lasted for two weeks, disrupted public transportation in the Western Cape province, which is home to a major manufacturing hub. The strike also led to some businesses being forced to close or operate at reduced capacity.
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Despite the slower pace of contraction in August, the South African manufacturing sector is still facing a number of challenges, including power cuts, rising inflation, and a weak global economy. These challenges are likely to continue to weigh on the sector in the coming months.
Some additional details:
- The PMI is a composite indicator of manufacturing activity that measures month-on-month changes in output, new orders, employment, suppliers’ delivery times, and inventories.
- The PMI is a leading indicator of economic activity, meaning that it tends to change before other economic indicators.
- The South African manufacturing sector is a major contributor to the country’s economy, accounting for about 15% of GDP.
- The sector has been struggling in recent months due to a number of factors, including power cuts, rising inflation, and a weak global economy.
- The government has taken some steps to address the challenges facing the manufacturing sector, such as providing financial assistance to businesses and