Load-shedding dims manufacturing output in February
Absa’s purchasing managers’ index fell to 46.2 index points in January, with new sales ordering falling below the neutral 50 point mark
Manufacturing activity in SA declined for the second month in a row in February, with Eskom’s load-shedding weighing on the energy-intensive sector.
The seasonally adjusted Absa purchasing managers’ index (PMI), which gauges activity in the manufacturing industry, eased to 46.2 points in February from January’s 49.9. It reached its highest level for 2018, of 50.7, in December — the first time since May 2017 that the index breached the neutral 50 mark. A score below 50 indicates contraction in the sector.
Friday’s print was lower than the Bloomberg consensus of 49.5.
Two of the PMI’s main sub-components came in above the neutral 50-point mark, while three sub-components registered below that level.
The new sales orders index fell back below the neutral 50-point mark after remaining above that level for the preceding three months. The index tracking expected business conditions in six months’ time declined slightly in February but, at 65.9, remains well above levels seen through the second half of 2018, Absa said on Friday.
Declines were also seen in the PMI’s employment index, while its inventories index rose by six points to reach 52.8 in February. This is the highest level since March 2017.
The PMI’s purchasing commitments index rose by a solid 8.2 points to reach 50 points in February.
Investec economist Kamilla Kaplan had warned ahead of the PMI that a decrease may be on the cards, as the global trade cycle is losing momentum, and domestic demand conditions remain week. Load-shedding is also likely to have had an adverse affect on operations, said Kaplan.
Although load-shedding had weighed on output, the fall in output may not be as severe as the survey suggests, said Capital Economics emerging-markets economist John Ashbourne, adding that the economy will likely accelerate over the course of the year due to weaker inflation, the passing of disruptions in the agricultural sector, and renewed confidence following May’s election.