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SA manufacturing expands at faster rate in May - Absa PMI

South Africa's manufacturing activity expanded at a faster pace in May as new sales orders grew, driven by domestic demand, the seasonally adjusted Absa Purchasing Managers' Index (PMI) showed on Tuesday.

A worker checks bottles of wine coming out of a production line at Nederburg Wine Estate in Paarl, South Africa, 8 July 2020. Reuters/Mike Hutchings

The index, a gauge of manufacturing activity in Africa's most industrialised economy, rose to 57.8 points in May from 56.2 points in April, remaining above the 50-point mark that separates expansion from contraction.

Four of the five subcomponents in the index were above the 50-point mark, with only the employment index dipping back into negative terrain, Absa said.

The new sales orders index reversed last month's loss, rising to 60.5, despite a dip in export sales. Absa said the increase was likely down to higher demand locally.

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The bank said recent sharp increase in confirmed Covid-19 cases, which saw the country implement tighter lockdown measures on Sunday, and nationwide power outages, would likely restrain manufacturing in coming months, however.

"Even though government has to date adopted a softer touch to lockdown restrictions, a renewed virus-induced change in spending behaviour by consumers and firms could still hinder domestic demand," Absa said in the release.

"The ever-present possibility of disruptive load-shedding likely also remains top of mind for many producers."


Reuters, the news and media division of Thomson Reuters, is the world's largest multimedia news provider, reaching billions of people worldwide every day.
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Reporting by Mfuneko Toyana; editing by Emma Rumney and Hugh Lawson.

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