South African factory activity accelerates decline in October – Absa PMI

JOHANNESBURG (Reuters) – South African manufacturing activity shrank at a faster pace in October, dragged down by weak domestic demand and adverse global events despite an improvement in local power supply.

The seasonally-adjusted Absa Purchasing Managers’ Index (PMI) fell to 45.4 points in October from an upwardly revised 46.2 in September, further below the 50-point mark that separates expansion from contraction.

South African bank Absa, which sponsors the PMI survey, said in a statement that it was “perplexing” the index had fallen despite an easing of rolling power cuts – known locally as load-shedding – in October.

“With key units of the Kusile power station resuming operations earlier than expected and the associated reduced load-shedding in October, adverse global events seem to have driven the poor expectations reading,” Absa added.

The sub-index measuring expected business conditions in six months was down by more than 12 points in October, while the business activity sub-index saw a slip of almost 3 points, likely reflecting constrained demand for manufactured goods.

(Reporting by Tannur Anders; Editing by Nellie Peyton and Alexander Winning)