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Absa PMI falls in January as business activity slips

1st February 2019

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South Africa's seasonally adjusted Absa Purchasing Managers' Index (PMI) fell in January as four out of five measures of factory performance declined, led by slumps in new orders and business activity, the survey showed on Friday.

The index, which gauges manufacturing activity in Africa's most industrialised economy, slipped to 49.9 in January from 50.7 in December, sliding just below the 50 mark that separates contraction from expansion.

The figure was however 2 points above the 2018 average, a sign the economy, which contracted in the first two quarters of last year, was recovering, although at a moderate pace.

Absa analysts said the results of the survey were mixed, with the decline in the sub-sectors slower than expected and offset by positive sentiment among purchasing managers.

"Respondents may have been relieved that January did not see a return of load-shedding. Furthermore, the seemingly more sustained recovery in demand may also have bolstered optimism," Absa said in the release.

State power firm Eskom, which supplies more than 90% of the country's power but is battling to keep the lights on after a decade of financial decline, had warned of possible power cuts in January as demand rose following the December holiday period.

Edited by Reuters

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