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South Africa's PMI sees factory activity at 13-month low in August

Sep 03 2018 12:32
Ana Monteiro, Bloomberg

An index tracking South African manufacturing activity posted its worst reading in 13 months in August, as new sales orders dropped.

The purchasing managers' index, compiled by the Stellenbosch-based Bureau for Economic Research and Absa Bank, slumped to 43.4 in August from 51.5 in July. A reading below 50 indicates contraction in the factory sector.

Business sentiment and the rand have wiped out all the gains that came on the back of President Cyril Ramaphosa's ascent to the power since December. Manufacturing, which accounts for about 13% of gross domestic product (GDP), shrank in the first quarter, contributing to the economy’s biggest contraction in nine years.

The industry lost 105 000 jobs in the three months through June.

"Worryingly, purchasing managers turned even more downbeat about expected conditions going forward," Absa said in an emailed statement on Monday, with the index tracking conditions in six months' time falling to the lowest since early 2016.

"The fact that a further deterioration is expected from the bleak picture of current conditions, as reflected by the August PMI survey, is very concerning."

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