1 November 2019 

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose to 48.1 index points in October, up from a revised 45.1 index points in September. The October level was slightly higher than the average of 47.3 recorded during the third quarter and in line with the average of 48.3 points recorded during the first nine months of the year.

Four of the PMI’s subcomponents improved from September, with only inventories moving lower. The business activity index increased after two consecutive declines, while new sales orders also improved somewhat from a sharp drop in September. However, both indices remained below the 50-point mark pointing to a decline in demand and output. This was countered by the supplier deliveries index which improved further in October. The employment index also ticked up, but at 42.3 points remains very low.

The headline PMI has only managed to edge above the neutral 50-point mark twice during the course of 2019 (in January and July). Even with the difficult current environment, respondents turned more negative about business conditions going forward. The index tracking expected business conditions in six months’ time fell to 45.7 in October – the lowest level in a year. Respondents might be concerned about the impact of the slowing global economy on demand for exported goods. The mid-month bout of load shedding likely also dampened spirits.