South African factory output suffered a sharp decline in June, judging by the Absa purchasing managers index (PMI) which showed a shock 4.8 point drop to 46.7 points. Economists had expected the index to sink slightly from May’s 51.5 points, but not to well under 50 points, which indicates the manufacturing sector is contracting instead of growing. The deterioration was broad based, with four of the five main subcomponents decreasing. Absa said in a statement on Monday: "The recent volatility is probably driven, or at least exacerbated, by continued uncertainty about the outlook for the domestic economy. "Several domestic data releases, such as the economy having entered a technical recession and business confidence plunging to recession-low levels, as well as continued uncertainty on the political front during the month, likely explain why respondents were notably more pessimistic about business conditions going forward." Absa warned that the manufacturing sector was bracing itself...
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