Absa PMI fell sharply to 48.8 index points in February from 53.0 in January
Johannesburg - The seasonally adjusted Absa Purchasing Managers' Index (PMI) fell sharply to 48.8 index points in February from 53.0 in January. This was the first time since September 2022 that the headline index fell below the neutral 50-point mark, pointing to a marked deterioration in business conditions in the factory sector.
Indeed, the business activity and new sales orders indices were both in contractionary terrain, with demand dipping for a second consecutive month. The February survey period included an unprecedented seven consecutive days of stage 6 load-shedding, which was likely top of mind for many respondents. To be sure, load-shedding once again featured frequently in the commentary where respondents explained why activity declined relative to the previous month.
A glimmer of good news was that export sales rose to the best level in a year, implying that producers supplying solely to the domestic market likely had a tough month. In line with a weaker output picture, the employment and inventories indices also came in below the neutral 50-point mark.
There was more bad news in the form of a sharp decline in the index measuring expected business conditions in six months' time. The index fell to 46.8 points in February, which is the lowest level since May 2020. This means that respondents have not been this downbeat about future conditions since the country was slowly moving out of the strictest phase of the COVID-lockdown.
Furthermore, the purchasing price index surged higher for a second month to reach the highest level since September 2022. The survey took place while the rand was very weak (against the US dollar), largely trading above R18/$. This would have filtered through to the costs of especially imported raw materials and intermediate goods. The surge in the PMI's price index suggests that we may see a renewed acceleration in factory-gate prices. That said, the index remains well below the peak reached in the first months of 2022.
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