JOHANNESBURG - South African bank Absa's purchasing managers’ index (PMI) fell to 41.6 index points in September from 45.7 in August, the second consecutive large fall which brought the index more than 10 points below July's high of 52.1 points, a report showed on Tuesday.
A PMI is an index of the prevailing direction of economic trends in the manufacturing and service sectors and effectively measures whether market conditions as viewed by purchasing managers are expanding, staying the same, or contracting.
The September decline in Absa's headline PMI was led by a sharp drop in three of its five sub-components, namely new sales orders, purchasing inventories and business activity.
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All three indices fell by more than 6 points to reach levels around 40 points.
In contrast, the supplier deliveries sub-component edged back above 50 points after dropping below that level in the previous month, providing some support to the PMI. The employment sub-component rose slightly, although it remained at a very weak level at 39.6 points.
"Besides sustained weak domestic demand conditions, the poor South African manufacturing print comes against a backdrop of growing concerns about the health of the global economy and, in particular, South Africa’s trading partners in Europe," Absa said.