South Africa‘s seasonally-adjusted Absa Purchasing Managers’ Index (PMI) contracted at a slower pace in March, helped by an improvement in the supplier deliveries subindex, but it still recorded a fourteenth consecutive month of contraction.
The index, which gauges manufacturing activity in Africa‘s most industrialised economy, rose to 48.1 points in March from 44.3 points in February, remaining below the 50-point mark separating shrinking from expansion.
“The PMI was, to some extent, lifted by the supplier deliveries subindex moving higher in March, reflecting slower delivery times,” Absa said in a statement.
“In normal circumstances, a slowdown in supplier deliveries is seen as positive for the sector as it suggests suppliers are busier. However, in this case, the slowdown in delivery times is caused by global supply-chain disruptions.”
The PMI showed that business activity and new sales orders indices lingered around 11-year low levels in March, partly due to the start of a 21-day lockdown imposed by the government to curb the spread of the coronavirus.
“Supply-chain disruptions mean that production is also not expected to return to full capacity immediately after the lockdown lifts,” Absa said.
“This suggests that the April factory figures will likely show a deep contraction. An extension of the lockdown is likely to result in some factories having to close permanently.”