After signs of growth in the first quarter of 2017‚ the seasonally adjusted purchasing managers index (PMI) fell below the 50-point mark in April.
The Absa PMI dropped to 44.7 index points‚ from an average of 51.9 during the first quarter.
It was the first full survey after the recent cabinet reshuffle and subsequent sovereign credit rating downgrades. It is likely that respondents expect economic growth and domestic demand to be weaker than before.
The decline was due to a slump in key subcomponents measuring business activity and inventories.
A score above 50 indicates an expanding manufacturing sector.
Last month‚ the PMI came in above the neutral 50-point mark for the third consecutive month but this reading had not taken President Jacob Zuma’s Cabinet reshuffle into account.
Absa said on Tuesday: “While the deterioration is worrying‚ the magnitude of the drop may not be reflected fully in official data as actual growth was already weaker in January and February than signalled by the higher PMI readings.
“The survey suggests that the sector experienced a rough start to the second quarter of 2017.”
The new sales orders index declined sharply in April‚ when an 8.3-point fall in orders was driven by the expectation of weaker demand from local customers.
The inventories index dropped to its lowest level since 2009.
“The declines in these three indices were so steep‚ the fact that the two other PMI subindices remained above 50 points could not prevent the headline figure from slipping sharply lower‚” Absa said.
The index tracking employment was little changed at 50.3 points‚ while suppliers’ performance rose by two points to 53.
TMG Digital
Manufacturing PMI plunges back into contraction territory after Zuma’s reshuffle
After signs of growth in the first quarter of 2017‚ the seasonally adjusted purchasing managers index (PMI) fell below the 50-point mark in April.
The Absa PMI dropped to 44.7 index points‚ from an average of 51.9 during the first quarter.
It was the first full survey after the recent cabinet reshuffle and subsequent sovereign credit rating downgrades. It is likely that respondents expect economic growth and domestic demand to be weaker than before.
The decline was due to a slump in key subcomponents measuring business activity and inventories.
A score above 50 indicates an expanding manufacturing sector.
Last month‚ the PMI came in above the neutral 50-point mark for the third consecutive month but this reading had not taken President Jacob Zuma’s Cabinet reshuffle into account.
Absa said on Tuesday: “While the deterioration is worrying‚ the magnitude of the drop may not be reflected fully in official data as actual growth was already weaker in January and February than signalled by the higher PMI readings.
“The survey suggests that the sector experienced a rough start to the second quarter of 2017.”
The new sales orders index declined sharply in April‚ when an 8.3-point fall in orders was driven by the expectation of weaker demand from local customers.
The inventories index dropped to its lowest level since 2009.
“The declines in these three indices were so steep‚ the fact that the two other PMI subindices remained above 50 points could not prevent the headline figure from slipping sharply lower‚” Absa said.
The index tracking employment was little changed at 50.3 points‚ while suppliers’ performance rose by two points to 53.
TMG Digital
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