Economic activity in manufacturing sector falls to five-month low

A worker assembles a dashboard on production line.
A worker assembles a dashboard on production line.
Getty Images

Absa’s Purchasing Managers’ Index, which measures measures economic activity in the country's manufacturing sector, fell to 50.3 index points in December, from 52.6 in November.

The index, released on Friday by Stellenbosch University’s Bureau for Economic Research, is at its lowest level since July 2020.

A figure above the 50 indicates an increase in activity while a figure below 50 indicates decreased activity.

The BER said in a note that the December figure suggests factory growth is now levelling off after the four months of gains following the sharp slump in activity brought about by April's strict lockdown. 

“[...] while another quarter-on-quarter uptick in manufacturing output is likely, the pace of the recovery momentum has slowed,” read the report.

The index measures five subindices: business activity, new orders, employment, supplier deliveries and inventories. 

The business activity index declined by 44.9 index points in December, while new sales orders continued to fall to 45.2 after decreasing below 50 points in November. The employment index also played a big role in the PMI’s December decline, falling to 43.8 points from 47.2 in November. The remainder of the indices also saw some declines in December, compared to November. 

The BER expects the second Covid-19 wave and the resultant lockdown restrictions to affect domestic demand in the liquor and hospitality sectors in particularly in the early part of 2021, while the threat of load shedding is also likely to hinder a strong January rebound.

Purchasing Managers Index

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