SA factory activity slumps further in March on power cuts – Absa PMI

South African manufacturing activity contracted again in March as rotational power cuts led to a deterioration in local business conditions, a survey showed on Monday.

The seasonally-adjusted Absa Purchasing Managers’ Index (PMI) fell to 48.1 points in March from 48.8 points in February, staying below the 50-point mark that separates expansion from contraction for the second consecutive month.

“Domestic demand seems to be struggling, with some comments referring to local demand faltering due to load-shedding (power cuts),” Absa said in a statement.

State power utility Eskom has implemented power cuts every day this year that sometimes last for up to 10 hours, after a record number of days with outages last year.

However, Absa said the respondents in its survey are more optimistic about business conditions going forward.

“Following a sharp deterioration in February, the index tracking expected business conditions in six months’ time rose to 55.5 from 46.8 in February. This means that purchasing managers generally expect conditions to look better later this year,” Absa said.