An index tracking South African manufacturing activity slumped to the lowest level since March
The purchasing managers’ index compiled by the Stellenbosch-based Bureau for Economic Research and Absa Bank Ltd., dropped to 47.9 in June from 49.8 in May. A reading below 50 indicates contraction in the factory sector.
Business sentiment and the rand have wiped out all the gains that came on the back of President Cyril Ramaphosa’s ascent to the power since December. Manufacturing, which accounts for about 13 per cent of gross domestic product, shrank in the first quarter, contributing to the economy’s biggest contraction in nine years. The PMI level suggests “that the sector is unlikely to stage a solid recovery,” Absa said in an emailed statement on Monday.
Power utility Eskom Holdings SOC Ltd. implemented rolling blackouts last month after protesters blockaded roads and attacked staff as wage negotiations broke down. This may also have damped confidence in June, Absa said.