South Africa’s manufacturing activity declined for a third straight month in October, suggesting that the factory sector is struggling to gain traction in the face of broad-based weak demand, survey results from the Bureau For Economic Research showed Monday.
The Barclays Purchasing Managers’ Index for the manufacturing sector dropped to 48.1 from 49.9 in September. Economists had expected a score of 49.2.
A PMI reading below 50 indicates contraction in activity. The latest score was the lowest since April, when the reading was 45.9.
Among the sub-indexes, those for business activity, employment, new sales orders declined. At 50.5, the new sales orders index suggested marginal growth.
“Persisting weak demand may be why output growth is not accelerating, despite an alleviation of electricity and other supply-side disruptions,” the survey said. “Manufacturers are likely cautious to expand output in the absence of a sustained improvement in demand.”
Meanwhile, the price index declined to 73.8 from 77.6 as slightly stronger rand exchange rate in October, particularly at the start of the month, likely alleviated some of the cost pressures for importers of intermediary and raw materials.
The index measuring expected business conditions in six months’ time also rose in October.
The material has been provided by InstaForex Company – www.instaforex.com