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Tuesday, 01 August 2023 15:56

Manufacturing suffers a setback after PMI retreats.

By Bhargav Acharya.

South African manufacturing activity contracted for the sixth consecutive month in July, driven by an increase in scheduled power cuts and transport disruptions, a survey showed on Tuesday.

The seasonally-adjusted Absa Purchasing Managers' Index (PMI) fell to 47.3 points in July from 47.6 points in June, falling further below the 50-point mark that separates expansion from contraction.

The business activity sub-index saw a sharp decline of almost 11 points in July.

"Besides the return of more intensive power cuts, delays in receiving inputs amid the transport disruptions on the N3 corridor through the month of July may explain the large drop," Absa said in a statement, referring to the particularly large drop in the business activity sub-index.

State power utility Eskom reduced the intensity of daily power cuts in June before ramping it up again in July. The power cuts, which at times last up to 10 hours a day, are a major constraint on businesses of all sizes.