Zimpapers Logo

A gauge measuring sentiment in South Africa’s manufacturing industry fell to the lowest level in more than a decade in September and it will probably get worse.

Absa’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, fell to 41,6 from 45,7 in August, the Johannesburg-based lender said in an emailed statement yesterday. That’s the lowest level since August 2009. The median estimate of three economists in a Bloomberg survey was 46,5. The gauge has been below 50 for all but one month this year, indicating con)traction in the manufacturing industry.

The PMI’s major sub-indexes remained below 50 and show that sentiment in the manufacturing sector will probably deteriorate even more. The gauge tracking expected business conditions in six months’ time declined for a fourth month to 46,1. New-sales orders dropped to 40,7 from 48,5 and business activity declined to 39,3 from 45,8.

The sub-index tracking prices rose to 76,7 from 73,6, suggesting that manufacturers’ profitability levels are likely to face increased pressure as a sustained weakness in demand points to little pricing power to pass on the higher costs to consumers, Absa said.

South Africa’s economy is stuck in its longest downward cycle since 1945, with business confidence at the lowest level in more than three decades.

The rand weakened as much as 1.1 percent versus the dollar to its worst level since August 30. It traded 1,04 percent lower at 15,2938 per dollar by 13:35 p.m. in Johannesburg.— Bloomberg.