Manufacturing weighed down by strike
South Africa’s purchasing managers’ index (PMI) dropped to its lowest level since August 2009 as an 18-week strike in the platinum industry curbed demand, Kagiso Tiso Holdings said.
The seasonally adjusted index fell to 44.3 from 47.4 in May, Johannesburg-based Kagiso said in an emailed statement on Monday. The median estimate of four economists surveyed by Bloomberg was 47.8.
The PMI data is adding to evidence of how the strike by 70 000 platinum-mine workers is weighing on the recovery in Africa’s second-biggest economy. The stoppage led to the biggest quarterly decline in mining production in almost half a century and curbed manufacturing. The economy contracted 0.6% in the first quarter, according to the statistics agency.
The sub-index for employment fell to 37.2 points, its lowest level in five years, from 44.6 a month earlier. This “could imply renewed job losses in the manufacturing sector,” Abdul Davids, head of research at Kagiso Asset Management, said in the statement. The new sales orders gauge increased to 44.8 points from 43.5.
“Today’s worse-than-expected manufacturing PMI figures only serve to underline the grave concerns we have with regards the near-to-medium term outlook for local industrial production,“Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said in an emailed note.
The rand fell 0.1% to 10.5870 per dollar by 12.30pm in Johannesburg.
The Bureau for Economic Research, based at the University of Stellenbosch near Cape Town, conducts the PMI survey on behalf of Kagiso. – Bloomberg