(Bloomberg) --
Business activity in South Africa's manufacturing industry fell to a record low in April, when a nationwide lockdown aimed at curbing the spread of the coronavirus pandemic brought output to a near standstill.
While Absa Group Ltd.'s Purchasing Managers' Index, compiled by the Bureau for Economic Research, fell to 46.1 from 48.1 in March, an index tracking business activity fell to a record low of 5.1 from 30.7. The median estimate of four economists in a Bloomberg survey was for a headline PMI number of 39.5.
Key Insights
- The low business activity reading, which is about 25 points below the lowest level recorded during the global financial crisis, suggests that the decline in actual manufacturing output will be far greater than the 23% annual fall recorded in April 2009, Absa said.
- While the index measuring employment activity fell to 26.6 as about half of the survey respondents reported lower staff levels, it could worsen as formal-sector employment often lags activity trends. “Further job losses are likely going forward,” the lender said.
- South Africa started easing lockdown restrictions this month, but some manufacturing capacity will continue to remain idle. The index tracking expected business conditions in six months' time fell to a record low of 27.3.
- Estimates from the National Treasury show South Africa's economy could contract by as much as 16.1% this year, depending on how long it takes to contain the virus and for the economy to recover.
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