Business sentiment among South African manufacturers weakened in May as activity and demand lost momentum, although it remained in expansion territory for the second consecutive month, a Purchasing Managers’ Index (PMI) survey showed on Monday (1).
The seasonally adjusted PMI, sponsored by South African bank Absa, fell to 50.8 points in May, down from 52.6 in April. A reading above 50 indicates expansion in business activity.
“In April, manufacturers benefited from a front-loading of demand due to expectations of further cost increases, but that effect faded in May,” Absa said in a statement.
The bank added that both activity and demand slowed, while input costs—pressured by a weaker rand and rising international oil prices—continued to challenge the manufacturing sector.
Production returned to contraction, with the business activity index dropping to 43.5 points from 52.8 in April. New orders also fell to 44.6 points, down from 52.9 the previous month.
“Some respondents warned that recent weakness in demand could persist in the coming months,” Absa noted.
On the other hand, the index measuring expectations for business conditions over the next six months rose above the 50-point threshold, reaching 52.9 points, compared with 47.4 in April.
Source: Reuters
