South African manufacturing industry sentiment slid back into contraction in August, signalling the surprising recovery in July was unsustainable.
Absa Group’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, fell to 45.7 points from 52.1 in July, the Johannesburg-based lender said in an e-mailed statement on Monday. That marks the seventh month this year it’s been below the 50 level, which indicates a decline in output. The median estimate of five economist estimates compiled by Bloomberg was 51.4.
All of the PMI’s major sub-indices dropped below 50, including the gauge tracking expected business conditions in six months time that’s been above the neutral level since November. The PMI suggests conditions in the economy remain weak and that manufacturing will continue to be a drag on growth in the second half of the year.
The employment index decreased to 39.1, the lowest level in more than five years and adding to the gloom in the jobs market. South Africa’s unemployment rate climbed to 29% in the second quarter, the highest in at least a decade.
“The business activity and new sales orders indices also slumped back in contractionary terrain during August after a single month above 50 points in July,” Absa said. “Respondents continued to be fairly downbeat about exports for a third straight month, while domestic demand likely also weighed on orders.” — Reported by Gordon Bell, (c) 2019 Bloomberg LP