PMI falls to an all time low
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JOHANNESBURG - Business activity in the South African manufacturing industry ground to a halt in April during the nationwide lockdown, plunging the Absa Purchasing Managers' Index (PMI) index to an all-time low.
President Cyril Ramaphosa announced a three-week nationwide lockdown at the end of March, which was later extended by a further two weeks, in a bid to curb the spread of the coronavirus.
Absa said today that the PMI survey crashed to a mere 5.1 index points in April with almost all respondents reporting a decline in activity compared to the previous month.
The current reading is about 25 points below the lowest level recorded during the global financial crisis.
Absa said this suggested that the decline in actual manufacturing output will be well in excess of the drop recorded at the time, a 23 percent annual fall in April 2009.
The bank said while some essential goods production continued during April, this was concentrated in specific subsectors and many respondents indicated that zero production took place during the lockdown.
With no to little activity in the local economy, overall demand for manufactured goods also plummeted.
Economist at Absa Corporate and Investment Banking, Miyelani Maluleke said the PMI survey showed the immediate, devastating impact the lockdown had on manufacturing output and overall demand.
“While some easing of restrictions from May should aid a slow recovery in coming months, a lot of manufacturing capacity will remain idle for some time,” Maluleke said.
Maluleke said as a result, the index tracking expected business conditions in six months’ time ticked down further from a record-low already recorded in March.