By Lehlohonolo Lehana.
The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose to 49.8 index points in April from 48.1 points in March, a survey compiled by Bureau for Economic Research (BER) in partnership with Absa Bank showed on Tuesday.
This marks an upward turn for PMI, which declined between February (48.8) and March (48.1). However, overall business activity is still tracking lower.
The index provides monthly feedback from business managers and is determined through surveys conducted with purchasing managers working in the manufacturing sector of the country.
Absa takes the feedback from industry heavyweights and processes all the data to create an index, with 50 representing stability, higher values indicating increased activity, and lower levels meaning decreased activity.
Absa said that despite the index improving, it failed to edge back to the neutral 50-point mark as business activity and new sales orders worsened relative to March.
“Indeed, the headline PMI would have deteriorated further if not for a significant improvement in the inventories index.”
“The underlying survey results suggest that the sector experienced another tough month at the start of the second quarter amid intense load-shedding hurting output and demand remaining under pressure,” said Absa.
Suppressed demand and consistent load shedding adding pressure is a viewpoint shared by economists and analysts alike. In its latest Economic Monitor report, Nedbank said that its data points to the underlying operating environment for the business being unlikely to improve due to load shedding.