A gauge measuring sentiment in South Africa’s manufacturing industry rose to a three-month high in April but has had the worst start to the year since the financial crisis.
Absa Group’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, rose to 47.2 from 45 in March, the Johannesburg-based lender said in an emailed statement Monday. While the reading beats the 45.8 median estimate of four economists in Bloomberg, it is below the neutral 50 mark.
The index has been below 50 every month this year, marking its worst start since 2009. The latest reading is in line with the average recorded in the first quarter of 2019 indicating that conditions "stabilised at a fairly depressed level at the start of the second quarter," Absa said.
Factory output contributes about 14% to gross domestic product, with the latest reading adding further pressure to South Africa’s attempt to recover from last year’s recession. The index measuring inventories fell to 42.5, the lowest level since October. The business-activity subindex jumped to 49.6 from 41.7 as export orders improved.
The employment index fell to 41.9, 4.5 points below the average recorded during the first quarter. South Africa’s jobless rate is 27.1%, near a 15-year high.
Survey respondents are now more optimistic about business conditions in six months’ time, supported by a lack of rolling power cuts in April. The country suffered through 10 straight days of electricity cuts in March as the country’s sole utility tried to stave off a total collapse of the grid.