South Africa’s manufacturing sector got off to a poor start in the fourth quarter as an index tracking factory activity fell to a 15-month low in October.
The purchasing managers’ index compiled by the Stellenbosch-based Bureau for Economic Research for Absa declined to 42.4 from a revised 44.5 in September. The reading has been below 50 for eight months, indicating contraction in the factory sector.
A key reason behind the drop in the PMI is the decline in the new-sales orders index to 39, the lowest level since July last year, Absa and the BER said. Purchasing managers also turned more pessimistic about business conditions going forward as the index tracking expected business conditions in six months’ time slumped to 41.7, the lowest level since January 2016.
Business sentiment and the rand have wiped out all the gains that came on the back of President Cyril Ramaphosa’s ascent to the power since December. The business cycle in South Africa, where the economy entered its first recession in almost a decade in the second quarter, is in its longest downward phase since records started in 1945, central bank data show.
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