Absa PMI rises in May as economic activity edges up

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South Africa’s seasonally-adjusted Absa Purchasing Managers’ Index (PMI) expanded in May with factories gradually restarting activity as the coronavirus lockdown eased, helping to lift production and sales.

The index, which gauges manufacturing activity in Africa’s most industrialised economy, rose to 50.2 points in May from 46.1 points in April.

On Monday, South Africa further eased the lockdown that has been in place since late March, allowing more people out for work, worship or shopping, and allowing mines and factories to run at full capacity.

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Africa’s most industrialised economy was already in recession when the pandemic struck. The economy is expected to shrink 7% this year by the central bank, but economists expect an even deeper recession as well as deep job losses.

The PMI report showed the business activity sub-index rose to 43.2 points in May from an all-time low of 5.1 index points in April. The new sales subcomponent also rose but remained below the 50-point mark dividing contraction from expansion, while the employment index was largely flat at 26.8.

“The sharp rise in the business activity index in May is relative to virtually nothing in April and still suggests very subdued overall activity levels,” economists at Absa said.

“Worryingly, some respondents indicated that whereas the lockdown regulations in May would have allowed for a further ramp-up of production, there was not sufficient demand to warrant this.”