SA’s factory activity improves in September – PMI

South African private sector activity showed a softer decline in September as an easing of lockdown restrictions boosted business activity and new sales, a survey showed on Monday.

The IHS Markit Purchasing Managers’ Index (PMI) rose to 49.4 in September from 45.3 in August, although the figure remained below the 50 mark that separates expansion from contraction.


Subscribe for full access to all our share and unit trust data tools, our award-winning articles, and support quality journalism in the process.

ONLY R63pm

“It was the highest reading since October 2019 and, when comparing with historical growth trends, was indicative of a rise in quarterly GDP,” said David Owen, an economist at IHS Markit.

In mid-September President Cyril Ramaphosa further loosened pandemic restrictions in South Africa, which had one of the world’s strictest lockdowns at the height of its Covid-19 outbreak, squeezing businesses and pushing the economy into a record contraction.

Output and new business fell at much softer rates, while future expectations ticked-up, with firms confident of higher demand. Spare capacity, however, led companies to further reduce employment, the survey found.

South Africa, which already has one of the world’s highest unemployment’s rates and has struggled to create employment even during growth periods, shed more than two million jobs between April and June.

“Expansions in output and demand will be needed to help businesses revive job markets though, as employment continued to fall steeply. A rise in jobs will likely appear after an increase in economic activity, as firms will need time to recoup losses from the pandemic,” said Owen.