Grim factory activity weighs on economy
The purchasing managers’ index for August plunged more than eight points, deep into contraction territory
A grim outlook for the manufacturing sector has dented hopes that SA’s economy will rebound in the second half of 2018. Activity in the sector, which accounts for about 13% of GDP, dipped to the lowest level in 13 months, the Absa purchasing managers’ index (PMI) showed on Monday. The PMI declined from 51.5 points in July to 43.4 in August. The index gauges activity in the manufacturing sector and is usually a good indicator of where the production numbers will head in two months’ time. A figure below 50 indicates contraction in the sector. The PMI data comes ahead of the release of second-quarter GDP figures on Tuesday. These are expected to show that SA narrowly escaped a recession, which is defined as two quarters of contraction. Capital Economics economist John Ashbourne said the GDP data was expected to show the economy “stagnated after the first quarter’s contraction”. Persistent low growth stunts job creation and dampens investment. This spells trouble for President Cyril Ram...
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