JOHANNESBURG - The ABSA Purchasing Managers’ Index plunged 6.4points to 45.7points last month as the business activity and new sales orders indices slumped back into contractionary terrain from 52.1points in July.
Purchasing managers said that they expected conditions in manufacturing activity to worsen from already weak levels after the surprisingly solid showing the prior month, despite weak domestic demand and growing concerns about the health of the global economy. New sales orders fell 6points to 48.5points, following two consecutive months of gains.
“The respondents continued to be fairly downbeat about exports for a third straight month, while domestic demand likely also weighed on orders,” Absa said.
“This negatively impacted output levels, while the sustained weakness in output growth, in turn, affected employment. The employment index fell by four index points to reach a more than five-year low in August.” Absa said, worryingly, the index tracking expected business conditions in six months’ time also dipped back below the neutral 50-point mark for the first time since November 2018.
Lukman Otunuga, senior research analyst at FXTM, said there would be a strong focus on the PMI for August, given how manufacturers across the globe are being treated by escalating trade tensions. “Investor confidence over the nation’s economic health could be dealt a blow if the manufacturing industry edges towards contraction territory,” Otunuga said.