SA business activity improves slightly, new survey shows

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While business activity ticked up slightly in October, businesspeople are concerned about the negative impact of a slowing global economy and load shedding on future trading conditions, according to the October 2019 Absa Purchasing Manager's Index.

The survey of economic trends, conducted by the Bureau of Economic Research, rose to 48.1 points, from 45.1 reported in September. Despite the improvement, the index is still below the neutral 50-point mark, which means economic activity is still in negative territory.

"The headline PMI has only managed to edge above the neutral 50-point mark twice during the course of 2019 - in January and July," the report read.

"Even with the difficult current environment, respondents turned more negative about business conditions going forward."

Respondents of the survey appear less optimistic for the next six months, as the sub-index tracking expected business conditions fell from 46.1 to 45.7, the lowest level in a year.

Slight improvement

October's overall index improved on the back of business activity lifting from 41 points to 45.6 points, after two consecutive declines. New sales orders also improved to 44.5 points. This after it dropped sharply from 50.2 points registered in August to 42.6 points in September. Both these indices are below the 50-point mark, reflecting a decline in consumer demand and output levels, the report read.

However, this was countered by the supplier deliveries index, which improved from 50 points to 56.5 points in October.

The employment index rose for a second month – from 40.5 recorded in September to 42.3 points in October. "While this is the highest level since May 2019, the level remains very weak compared to a longer-term history. The 20-year average of the series is 5 points higher than the current reading," the report read. "This is a four-month high and the index has now fully recovered from a sharp decline recorded in August."

The prices index broke its upward trend and declined from 76.7 points to 69. "This was despite the rand, on average, weakening somewhat during the month," the report read.

The inventories index slipped down from a 10-year low of 39.6 in September, to 39.2.

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