Industrial action weighed on the manufacturing sector in July 2011 with the Kagiso purchasing managers’ (PMI) index falling to a two-year low.
PMI hit 44,2 after dropping by 9,7 points in July 2011, according to statistics released on Monday.
The index, which measures the efficiency of the manufacturing sector, has decreased for the fourth straight month.
Industrial action was identified as the main driver of the decline, with the business activity index falling 19.3 index points in July to 35.9 — the biggest decline of all PMI sub-indices.
Industrial action is currently being experienced in the mining sector, with 100 000 workers at AngloGold Ashanti, Gold Fields, Harmony Gold and another smaller mining group striking for higher wages.
“This is utterly atrocious — strike activity has weighed in but there is no doubt the economy is in a soft phase through weakened consumer activity and a measured global slowdown,” Kevin Lings, chief economisty at Stanlib, told Mail & Guardian.
Sub-indices such as new sales orders and inventories were the hardest hit, dropping 9,2 and ten points respectively, according to Kagiso’s report.
Job opportunities in the sector also waned, with the PMI employment index falling 8,6 index points to 39,1.