South African business activity fell in Oct after strike -PMI
South Africa's private sector activity contracted in October after a strike by its biggest metal-workers union led to a marked slowdown in business activity amid ongoing raw material shortages, a survey showed on Thursday.
IHS Markit's Purchasing Manager's Index (PMI) fell to 48.6 in October from 50.7 a month before. In September the PMI was above the 50 point mark that separates expansion from contraction for the first time since June.
"The strike by the National Union of Metalworkers during October led to a marked drop in business activity," said David Owen, economist at IHS Markit.
Numsa, which has around 155 000 members in the sector, launched the strike early last month to press for higher salaries.
"Output fell in all monitored sectors, although the decline was most severe in manufacturing. Shortages of raw materials were widely reported again, with steel, chemicals and electrical components the most likely to be in short supply," Owen said.
Owen added that businesses affected by the strikes were often unable to meet demand, leading to a solid fall in overall sales and a further increase in backlogs.
Shortages of raw materials were also highlighted by businesses, contributing again to weaker activity, longer lead times and an acceleration of input price inflation.
That is likely to impact third quarter economic data although there could be a swift recovery in November and December given the strikes have now ended, helping South Africa to avoid a recession.
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