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South African factory activity expands at slower rate in June - PMI

5th July 2021

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South African private sector activity expanded at a slower rate in June as output fell for the first time this year and growth in new orders stalled, a survey showed on Monday.

IHS Markit's Purchasing Managers' Index (PMI) fell to 51.0 in June from 53.2 in May, staying above the 50 level that indicates expansion but signalling a loss of momentum in the private sector economy.

"Output decreased for the first time in six months during June, as the tightening of Covid-19 measures hit customer demand. Supply problems were also highlighted by survey panellists, meaning that some firms were unable to fulfil new orders," IHS Markit said in a statement.

The fall in output was the fastest since August 2020, while new business growth stalled in June after two successive months of solid expansion, IHS Markit said.

The output index fell to 48.8 in June from 53.2 in May, while the new orders index dropped to 50.1 from 53.6.

"The fall in output was modest and softer than those seen throughout much of 2020. This suggests that the economy is becoming more resilient to the pandemic and may not suffer too badly from renewed lockdown restrictions," IHS Markit economist David Owen said.

"That said, the move to level 4 (of a five-level system) at the end of June will likely lead to a sharper decline in activity over July."

South Africa, the worst-hit on the African continent in terms of recorded Covid-19 cases and deaths, on Sunday tightened its lockdown restrictions after a surge in new infections.

Edited by Reuters

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