A measure of South African manufacturing confidence has fallen to its lowest level since the harshest months of the coronavirus lockdown in 2020, as demand and activity deteriorated sharply.
Absa Group's Purchasing Managers' Index compiled by the Bureau of Economic Research fell to 43.6 in January from 50.9 the previous month, Johannesburg-based lender Absa Group said in an emailed statement on Thursday. did. This is the lowest level since May 2020 and below the median estimate of 50 of three economists polled by Bloomberg, indicating a contraction in an industry that accounts for about 15% of South Africa's gross domestic product.
“Apart from the 2008-2009 global financial crisis and the 2020 pandemic lockdown period, only a few times have the index fallen to such a low level,” the financial institution said, adding that domestic manufacturing has started this year. This reflects the fact that the market was extremely weak. Said.
The main factors behind the decline in the index were corporate activity, new orders, and inventory sub-indexes.
The business activity index fell to its lowest level since July 2021, when the economy experienced civil unrest that cost the economy R50 billion, even though there were fewer power outages in January than in most of 2023. Regardless, financial institutions said: Said. The company said the sharp decline was likely due to a decline in new orders due to a “sharp decline in demand” and a “lack of materials and goods needed for production.”
The International Monetary Fund has almost halved its economic growth forecast for South Africa this year, warning that logistical challenges are constraining activity and holding back the southern African region.
Still, respondents expressed more optimism about future business conditions. The index, which tracks expected business conditions six months from now, rose to 58.7 from 57.9 in December, with respondents expecting conditions to be better than the current dire environment, rather than better compared to “normal” or long-term economic conditions. also suggests that they expect the situation to improve.
