Absa PMI drops below 50 amid high stages of loadshedding
The seasonally adjusted Absa Purchasing Managers’ Index (PMI) dropped to 48 points in February, from 53 points in January, pointing to a deterioration in the factory sector’s business conditions.
The PMI last measured below the neutral 50-point mark in September 2022.
Absa explains that demand in the business activity and new sales orders indices dipped for a second consecutive month in February, to 45.5 and 49.4, compared with 56 and 49.9 in January, respectively, likely owing to the unprecedented seven days of Stage 6 loadshedding in the survey period.
Export sales, however, rose to the best level in a year, implying that producers supplying only to the local market likely had a tough month.
In line with the overall weaker output situation, the employment and inventories indices also came in below the neutral mark at 47.1 and 46.5 points, respectively, down from measurements of 48.4 and 53.1 in January.
Further, the purchasing price index surged higher for a second month to reach the highest level since September 2022, at 78.6, compared with 69.3 in January
Absa says the survey for the February PMI took place while the rand was weak against the dollar, largely trading above R18 to the dollar. This would have filtered through to the costs of imported raw materials and intermediate goods.
Absa adds that the surge in the PMI’s price index suggests a renewed acceleration in factory prices may be in store.
The supplier deliveries index continued on a downward trend to 55.3, which is close to the long-term average level of 53 points. Absa explains that the downward move in recent months is likely owing to continued weakness in demand, with lower demand for inputs resulting in more responsive deliveries.
Additionally, less constrained global supply chains result in faster delivery times, and could have also contributed to the downtick, since this index is inverted and faster delivery times result in a decrease.
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