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Floods, load shedding pile pressure on SA’s economy

Absa’s PMI rises to 54.8 in May.
A view showing the destruction at Umdloti beach north of Durban from the KZN floods in April. Image: Getty Images

South African factory output has yet to fully recover from April’s widespread power cuts and devastating floods in the eastern KwaZulu-Natal province, a survey showed, the latest setback for an economy reeling from surging fuel and food prices.

Load shedding all but a certainty until these things happen …
KwaZulu-Natal still on the receiving end of calamities

Absa Group’s Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research, rose to 54.8 in May from 50.7 a month earlier, but remains well below the March recording of 60.

A subindex that measures business activity averaged below 50 for April and May, suggesting that manufacturing output may contract in the second quarter, the lender said in a statement on Wednesday.

Read: Supply chain pressures now worse than during Covid-19 peak – PwC

The PMI rebound was largely driven by a significant recovery in the new-sales-orders index, reflecting a normalisation in domestic-demand conditions after the floods and increased exports as port operations resumed. An index tracking expected business conditions in six months’ time jumped to 63.3, after averaging 55.4 in the prior two months.

“It is difficult to point to a single factor to explain the improvement, but optimism that cost pressures at the start of the pipeline have peaked may explain some of the improvement,” Absa said.

South Africa also moved through its fifth wave of coronavirus infections without renewed lockdown restrictions, while “the recovery in export performance and tentative signs of better functioning supply chains may have also buoyed sentiment,” it said.

© 2022 Bloomberg


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What is a greater pressure (than floods and load-shedding on (although related) on the SA’s economy is ANC corruption.

Lockdowns that prevent businesses from servicing loan agreements.
A popular uprising against the state and a looting spree that dumps half the country in chaos.
The failure of Eskom shuts down business activity and punches a hole in the income statement.
The failure of municipalities and SOEs impacts the capital structure of businesses and suppresses economic activity.
Daily “service delivery protests” that disrupt business activity.
Criminal mafia gangs that infringe property rights and contracts.
The decay of rail and harbor infrastructure prevents trade.
A multitude of taxes on capital formation like the BEE tax and the redistributive municipal rates and taxes regime.
Useless SOEs that tax the productive private sector and deliver nothing.
The Department of Minerals and Energy uses the Mining Charter to prohibit the exploration of these products.
SOEs that own a monopoly to deliver products that they fail to deliver.

Every single one of these factors, independently, is enough to sink a banking system. How on earth is it possible that our banking system remains standing amidst this combination of unnatural, self-inflicted disasters? The ANC government destroys the collateral in the system.

Honestly, I don’t want to be the Governor of the Reserve Bank. He deserves the Porcupine Quill Reward for bravery.

corruption, RET, loadshredding, droughts, floods, locusts, covid, bbbeee and putin

What will our tenth plague be?

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