Picture: MASI LOSI
Picture: MASI LOSI

The Absa purchasing managers index’s (PMI’s) business activity indicator dropped to record lows in April as the national lockdown brought manufacturing activity to a near halt. 

Business conditions, however, dropped only moderately. 

The index fell to 46.1 points in April from 48.1 while the median forecast among economists polled by Bloomberg was 39.5. The PMI measures activity in the manufacturing sector and a score below 50 points indicates contraction. The sector accounts for about 13% of GDP.

The bank said the small decline in the headline PMI was due to the inadvertent positive boost from supplier deliveries.

“This is despite unprecedented declines in the other four subcomponents and means that the headline reading does not provide a fair reflection of conditions on the factory floor in April,” Absa said.

The bank said the decline in the Absa PMI business activity indicator to a low of 5.1 points reflected the significant drop in activity in the manufacturing sector during the initial 21-day lockdown.

“The PMI survey shows the immediate, devastating impact the lockdown had on manufacturing output and overall demand. While some easing of restrictions from May should aid a slow recovery in coming months, a lot of manufacturing capacity will remain idle for some time,” said Absa Corporate and Investment Banking economist Miyelani Maluleke.