South Africa’s seasonally-adjusted Absa Purchasing Managers’ Index (PMI) recovered further in September as easing of lockdown restrictions continued to boost business activity and new sales, a survey showed on Thursday.
The index, which gauges manufacturing activity in Africa’s most industrialised economy, rose to 58.3 points in September from 57.3 points in August, well above the 50-point mark that separates expansion from contraction.
“Although the headline PMI also improved on a quarter-on-quarter basis, the increase in the business activity component is more pronounced and probably better reflects the pure output dynamics at this stage,” Absa said in a statement.
South Africa imposed a strict coronavirus lockdown at the end of March, squeezing businesses and consumers, and economic output recorded its largest contraction ever in the second quarter.
Absa said the employment index remains the main drag on the PMI, but a further increase in the index suggests that the pace of job losses has slowed.
The bank said purchasing managers remain optimistic about business conditions going forward. “The index tracking expected business conditions in six months’ time ticked up to 64.5 from 63.4 in August and a low of just 27.3 index points in April.”
“Another positive development was that the new sales orders index stayed at an elevated level in September. Some respondents mentioned that customer restocking boosted orders, although export sales softened somewhat. Furthermore, the purchasing inventories index rose back above the neutral 50-point mark for the first time since mid2019.”