SA Elections Effect Manufacturing Sector
South Africa’s manufacturing health might be weakening. The Absa Purchasing Managers’ Index (PMI), a key indicator of industry sentiment, plunged over 10 points in May and dipped below zero. This suggests a possible decline in manufacturing output last month, potentially linked to pre-election uncertainty. The PMI’s weakness also raises concerns about a potential recession.
A recent survey shows a sharp decline in South African factory output during May.
This drop is linked to two factors: uncertainty surrounding the recent national election and weak demand for manufactured goods. The PMI revealed a score of 43.8 for May’s manufacturing activity, down from 54.0 in April. Scores above 50 indicate expansion, while those below signal contraction.
“Numerous respondents said that orders were put on hold as clients waited for the election results. The PMI has been in contractionary territory for three out of five months this year, as the manufacturing sector seems volatile in an election year,” ABSA explained in a statement.
Notably, this is the third time in five months that the PMI has dipped into contractionary territory.
According to Absa, many survey participants attributed the decline in activity to clients delaying orders until the election outcome was clear.
