The Absa purchasing managers index (PMI) rose in May, pointing to an improvement in the manufacturing sector, which accounts for about 13% of SA’s GDP.

The seasonally adjusted Absa PMI, which is published in conjunction with Stellenbosch University’s Bureau for Economic Research (BER), rose to 57.8 points in May, from 56.2 in April, with four of the five-subcomponents staying above the 50-point mark, which separates growth from contraction.

The new sales orders index regained May’s loss and rose to 60.5 index points, the data showed on Tuesday, signalling domestic demand, while respondents noted a dip in export sales.

Business activity rose to 58.8 points as a result of the higher orders while inventories also improved. However, employment index dipped below the neutral 50-point mark, pointing to weak labour market.

The survey also showed a pickup in input costs, as result of higher electricity and fuel  prices, though it note that a stronger rand could soften its effect going forward. The rand is trading its best level against the dollar in nearly two years at about R13.71/$.

Emerging signs of third wave of Covid-19 infections and another round of load-shedding could undermine activity within the manufacturing sector.

“Even though the government has, to date, adopted a softer touch to lockdown restrictions, a renewed virus-induced change in spending behaviour by consumers and firms could still hinder domestic demand,” Lisette de Schepper, senior economist at BER, said in a statement.

“The ever-present possibility of disruptive load-shedding likely also remains top of mind for many producers.”



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