JOHANNESBURG - Sentiment in South Africa’s manufacturing industry had the worst quarter in 11 years, and it’s expected to deteriorate even further due to a nationwide lockdown to limit the spread of the coronavirus.
While Absa Group Ltd.’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, rose to a five-month high of 48.1 in March from 44.3 in February, the average for the quarter was 45.9, the worst since 2009, the Johannesburg-based lender said in an emailed statement Wednesday.
The median estimate of four economists in a Bloomberg survey was that the index would drop to 41.1 in March.
Sentiment in South Africa’s manufacturing industry had the worst quarter in 11 years, and it’s expected to deteriorate even further due to a nationwide lockdown to limit the spread of the coronavirus.
Key Insights
- If the lockdown only last three weeks, factories are set to lose 10 working days this month compared with three in March, and production is also not expected to return to full capacity immediately after the restrictions lift.
- An index tracking expected business conditions in six months’ time fell to 29.1. That’s the lowest level since record the series started in 1999.
- “An extension of the lockdown is likely to result in some factories having to close permanently. This will have a sustained negative impact on production and could also result in further job losses in the sector,” the lender said.
- The manufacturing PMI has been below 50 for all but two of the past 15 months, indicating contraction in an industry that accounts for about 13% of South Africa’s gross domestic product.