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More SA companies expect a downturn in coming months - survey

Sep 02 2019 11:28
Lameez Omarjee, Fin24

Economic activity remained in the doldrums during August, with the Absa Purchasing Manager's Index declined.

The Purchasing Manager's Index (PMI), released on Monday, is an economic activity index based on a survey conducted by the Bureau for Economic Research. Purchasing managers at different SA businesses are surveyed as part of the index. 

The neutral mark is 50-index points, any figure above that signals an improvement while a figure below that signals a deterioration.

According to the latest report, the decline in August's reading to 45.7 points was "larger than anticipated". The previous reading for July was more solid at 52.1 points.

All of the factors which are measured to arrive at the final PMI figure came in below the neutral 50-point mark, according to the report.

For example the business activity index dropped from 56.9 points in July to 45.8 points in August. The new sales orders index similarly dropped from 54.5 points in July to 48.5 points. 

"Respondents continued to be fairly downbeat about exports for a third straight month, while domestic demand likely also weighed on orders," the report read.

This had negative implications for output levels, which reduced. "The sustained weakness in output growth, in turn, affected employment," the report read.

The employment index as a consequence dropped to reach a "more than five-year low" of 39.1 points in August.

Respondents are not positive about the outlook on future business conditions – as this index dropped below the 50-mark for the first time since November 2018, according to the report.

"This means that more purchasing managers expect conditions to worsen (from already weak levels) going forward," the report read.

absa  |  sa economy  |  job creation  |  economic growth  |  business
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