SA’s factory activity contracts further under lockdown – PMI

South African private sector activity contracted again in May, reaching a record low, as output and new sales collapsed during the nationwide coronavirus lockdown that began in March, a survey showed on Wednesday.

Markit’s Purchasing Managers’ Index (PMI) fell to 32.5 in May from 35.1 in April, its lowest level since the survey began in 2011. The figure was below the 50 level that separates expansion from contraction for the 13th month in a row.

All sub-indexes of the survey slumped to their lowest on record during May, with sharp declines in employment and new orders in addition to crumbling output due to the lockdown.

“Most notably from the latest survey results, business sentiment regarding the 12-month outlook for activity turned negative for the first time in the series,” said David Owen, economist at IHS Markit.

“As such, firms are increasingly concerned that the extended lockdown period may hurt business activity for some time.”

Africa’s most industrialised economy is in its tenth week of a lockdown aimed at limiting the spread of COVID-19, the disease caused by the novel coronavirus, which has so far infected more than 34 000 South Africans and caused 705 deaths.

The central bank expects the economy, which is already in recession, to contract by 7% this year, but a number of analysts predict a double-digit contraction.

On Monday, the government further eased lockdown restrictions — to level three of five — allowing people out for work and shopping and permitting mines and factories to run at full capacity.