SA factory managers downbeat as sales orders slump

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An index tracking business conditions in South Africa’s manufacturing sector edged up last month, but purchasing managers remained downbeat as new sales orders slumped.

The gauge, which measures expected business conditions in six months’ time, rose to 49.8 from 48.1 in March, Absa said on Wednesday.

“Despite the improvement, the index failed to edge back above the neutral 50-point mark as business activity and new sales orders worsened relative to March,” the lender said.

“The headline PMI would have deteriorated further if not for a significant improvement in the inventories index. The underlying survey results suggest that the sector experienced another tough month.”

South Africa is suffering its worst bout of electricity rationing yet, with state-owned utility Eskom implementing rolling blackouts —locally known as load-shedding — on more than 200 days last year and almost every day so far in 2023. The outages, which are needed to protect the grid from collapse when Eskom’s plants can’t meet demand, are curbing activity and demand in Africa’s most industrialised economy.

An inventories sub-index rose to its highest level since mid-2022, which could be an indicator that supply chains are working more effectively, according to Absa.

“On the demand front, new sales orders moved down more decidedly than output and reached the worst level since September 2022,” with the sub-index declining to 44.3 from 48.5 in March, it said.

The manufacturing sector accounts for about 14% of South Africa’s gross domestic product.

SA factory managers downbeat as sales orders slump | Business (