Manufacturing activity in South Africa fell in June for the first time since October, due partly to reduced working hours as the country hosts the Soccer World Cup, a purchasing managers’ survey showed on Thursday.
The June purchasing managers’ index (PMI) fell to 48,4 in June, on a seasonally adjusted basis, from 51,1 in May, according to the survey by the Bureau for Economic Research.
The index had held above the 50 mark — which separates growth from contraction in manufacturing activity — since November as the economy picked up.
“The June PMI weakness was widespread amongst the most important PMI subcomponents … Reduced working hours related to the Fifa World Cup may explain some of the decline,” said Andre Coetzee, head of fixed income at Kagiso Securities, which sponsors the PMI survey.
“The slowing of manufacturing momentum, combined with the recent bumps … experienced in the global recovery, seem to be having a negative impact on purchasing managers’ expectations about the future,” Coetzee said.
The survey showed that new orders continued to grow but at a slower pace. A backlog of sales orders also increased, indicating there was still some demand for manufactured goods in June, Kagiso said.
“These trends hint that there may be some one-off factors that can explain the business activity decline,” said Coetzee.
Also worrying was a further decline in the PMI’s employment component to 45,9 in June, the lowest level since November 2009. The employment index fell below 50 in May. — Reuters