South African factory activity continues to expand May - PMI
South African private sector activity expanded at a slightly slower pace in May, with continued increases in new sales driving output and employment growth, but price pressures capping the overall pace of activity, a survey showed on Thursday.
IHS Markit's Purchasing Managers' Index (PMI) dipped to 53.2 in May from 53.7 in April, staying above the 50 level that indicates an expansion for the eight month in a row.
The April figure was the highest since March 2012, and the solid pace of growth continued in May, with businesses reporting close to a record increase in output.
According to IHS Markit, rising activity levels were mostly linked to an increase in new business inflows, which rose for the second month in a row and markedly overall. Firms said the demand improvements were largely due to domestic sales.
Higher input costs, however, tamed the rate of overall expansion.
"Supply shortages were evident, however, with firms mentioning a lack of availability of raw materials such as metals and timber. As a result, input costs rose at the quickest pace since June 2016," said David Owen, an economist at HIS Markit.
"Output charges increased sharply and to the greatest extent in almost five years, giving additional evidence of inflationary pressures that could harm the economic recovery," Owen added.
Both consumer and producer price inflation rose sharply in the previous month after being subdued for most of the Covid-19 lockdown period in 2020 and but began to rise in the latter stages of the year and in early 2021 once restrictions had been eased.
The central bank has said it expects the inflation pressures to be transitory.
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