Proudly African bank Absa, in partnership with the South African National Association for the Visual Arts (SANAVA), officially opened applications for the 2021 Absa L’Atelier art competition, and invite young artists from across the continent to enter.

Since its inception 35 years ago, the Absa L’Atelier has showcased and continues to invest in some of the finest young artists from the 12 African countries where Absa has a presence. 

“With this year’s theme ‘The Act of Art’, we are calling on our continent’s fearless creators to act now and enter. This competition will once again provide an opportunity for visual artists to respond and make their voices heard. We are committed to putting the basic building blocks in place to ensure that young artists from across the African continent can reimagine their futures and bring their possibility to life,” says Dr Paul Bayliss, Specialist Art Curator at Absa Group.

Absa L’Atelier has built a lasting legacy, providing the next generation of young African artists with the support, recognition, and exposure they need to cement their burgeoning careers – and this year will be no different, despite the ongoing presence of the global COVID-19 pandemic.

With travel bans and country restrictions still in place, and vaccine programmes still being rolled out globally, the 2021 Absa L’Atelier Awards Programme has been re-envisioned. “The pandemic has allowed Absa to advance our digitally led approach, and the entire 2021 Absa L’Atelier will take place virtually, from online submissions to hosting a virtual awards ceremony. The adjudication process will also be live-streamed using an online platform, enabling us to lead the charge in being digitally progressive in the visual arts,” says Dr Bayliss. 

The prizes for the 2021 Absa L’Atelier winners have also been re-envisioned. “In light of the pandemic, it was agreed with the rightsholders, SANAVA, that winners will receive laptops and data and exposure to intensive virtually-hosted mentorship and masterclasses geared towards facilitating them with skills and opportunities to develop their careers.”

“This enables the winners to take up their prize irrespective of future uncertainty brought about by the pandemic. We believe it’s no longer about giving artists an amount of money but instead affording them with the skillset to develop and thrive as artists in a forever changing world.” explains Dr Bayliss.

The innovative, digitally led approach will ensure that winning artists still have access to highly skilled mentors to support them in growing their brand, teaching them the relevant skills that would best position them as they establish themselves in the industry.

Due to various COVID-19 controls, the 2019 ambassadors, as the three overall winners are called, were not allowed to travel and take up their residencies at the Cité Internationale des Arts in Paris, France, or at Future Africa, University of Pretoria nor at Nirox Sculpture Park in the Cradle of Humankind.

The three 2019 ambassadors: Nigeria’s Raji Bamidele, Tanzanian artist Winifrid Luena and South African artist Nkhensani Rihlampfu, will now have an opportunity to take up their prizes and will follow the same virtual mentorship and masterclass programme as the 2021 winners. Discussions are still underway around the prize of Phoka Nyokong, the 2019 Gerard Sekoto winner, who may still take up his residency in France at a later stage.

Multi-media artist Rihlampfu, whose work is aimed at exposing the manipulation of communication through gesture and assumption by using fantastical figures to immerse viewers in a reality founded in perception, looks forward to finally enjoying his rewards. “The Absa L’Atelier is one of the continent’s most prestigious art competitions and I was honoured to be selected as a winner in 2019.  I look forward to using all the tools and masterclasses provided by Absa to improve as an artist.  I believe this platform will give me the courage to extend my horizons beyond the borders of my native country.” 

Nyokong’s Gerard Sekoto Award is handed to the most promising emerging South African artist aged 25 to 35. This Award has been supported for more than a decade by the Embassy of France, the French Institute and the Alliance Française. He was selected for his photographic exhibition, which covered themes such as gender (mis)identity, collective social anxiety and the temporality of the human material experience. 

Nyokong encourages other artists to take up the baton for this year’s competition and benefit from the exposure that comes with being part of the Absa L’Atelier community. “Art plays an important role in the lives of many African homes and Absa L’Atelier allows all emerging artists to showcase what they can do – not only to the continent but to the rest of the world. I implore all artists to act now and enter so they too can experience what the next level of art looks like and, in the process, have a real opportunity to grow as an artist.”

The visual arts afford Absa the opportunity to play a shaping role in society by identifying, nurturing, and supporting up-and-coming artists.  “Through Absa L’Atelier, we give artists on the continent an opportunity to showcase their work and we are proud to be associated with the competition over such a long period of time,” says Dr Bayliss.

SANAVA President, Dr Avitha Sooful, also commended the enduring partnership between the two organisations and hopes to continue to impact the African visual arts scene for years to come. “Our partnership with Absa has grown from strength to strength and it bodes well for the development of African artists whose work will influence the continent’s creative economy, now and in the future.”

“With this year being our 35th year in existence, we hope to double the amount of entries from our continent’s young and fearless creators, and we call on all artists to act on their art and become part of the L’Atelier legacy,” concludes Sooful.

For further information about Absa L’Atelier competition, please visit https://latelier.absa.africa

NOTES TO THE EDITOR

Due to the continued impact of Covid-19, a re-envisioned prize will now be offered to the winning L’Atelier ambassadors.

•  A new laptop; as well as the provision of sufficient data to enable required online activities.
•  Ten virtual masterclasses with leading experts from across the globe.
• Mentorship by a leading local authority in the visual art industry – the mentor will be from the winning artist’s country of residence.
•  Winning artists will work together towards a group exhibition consisting of both individual and collaborative artworks.
• The three winning artists’ group exhibition will open in the Absa Gallery in Johannesburg, South Africa within a year of winning the prize. All materials required for putting together this exhibition will be covered, within reason, by Absa. If a physical exhibition in the Absa Gallery is not possible, the exhibition will be hosted virtually.
• In the following year, the exhibition will travel to each of the ambassadors’ respective countries.
• Each ambassador will have the option of hosting a solo exhibition by the Absa Gallery within a five-year period of winning the prize.

For more information please contact:
Liezl Squier 
Absa Group Media Relations
082 375 3554
liezl.squier@absa.africa

About Absa L’Atelier

The Absa L’Atelier is one of Africa’s most prestigious art competitions, and 2021 sees the 35th edition of the competition.

The Absa L’Atelier rewards young visual artists aged 21 to 40, with the opportunity to develop their talents abroad. This is clearly evidenced by the previous winners and the benefits and experience they attained by participating.

Artists who are citizens and permanent residents of Botswana, Ghana, Kenya, Mauritius, Mozambique, Namibia, Nigeria, the Seychelles, South Africa, Tanzania, Uganda, and Zambia and who reside in the above countries, are eligible to participate in the Absa L’Atelier and are hereby invited to enter.

About Absa Group Limited

Absa Group Limited (‘Absa Group’) is listed on the Johannesburg Stock Exchange and is one of Africa’s largest diversified financial services groups. 

Absa Group offers an integrated set of products and services across personal and business banking, corporate and investment banking, wealth and investment management and insurance.

Absa Group has a presence in 12 African countries. The Group’s registered head office is in Johannesburg, South Africa, and it owns majority stakes in banks in Botswana, Ghana, Kenya, Mauritius, Mozambique, Seychelles, South Africa (Absa Bank), Tanzania (Absa Bank Tanzania and National Bank of Commerce), Uganda and Zambia.  The Group also has representative offices in Namibia and Nigeria, as well as insurance operations in Botswana, Kenya, Mozambique, South Africa, Tanzania and Zambia, and an International Representative Office in London and New York.

About South African National Association for the Visual Arts (SANAVA)

SANAVA is the oldest, constitutionally established, most representative, national non-governmental association for the promotion of the visual arts in South Africa, its origin dating back to 1851 when the Cape Fine Arts Society (CFAS) was established.

SANAVA promotes the visual arts, assists in the development of visual artists, and furthers international cooperation in visual arts. The organisation is also a member of the International Association of Art – a non-governmental organisation of UNESCO – with its head office in Paris, France.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose for a third consecutive month to reach 57.4 index points in March, from 53 the month before. The increase was supported by an improvement in all five subcomponents relative to February. Only the employment index remained stuck below the neutral 50-point mark with the other four key sub-indices pointing to an expansion.

Promisingly, respondents reported another solid improvement in demand with the new sales orders index registering its third consecutive increase. The improvement was supported by export sales increasing relative to the previous month for the first time since October 2020. The recent better-than-expected manufacturing PMI readings in Europe support an improved local export performance. Domestic demand is likely also on the mend due to the relaxation of local lockdown restrictions from the start of the year. While it remains to be seen whether the uptick in demand is sustained in coming months, the rise of late drove a further improvement in business activity. The index registered another solid increase following a sharp improvement in February. The further rise bodes well for a continued recovery in manufacturing production. However, purchasing managers turned slightly less optimistic about expected business conditions in six months’ time. After remaining unchanged at 59.2 points in February, the index fell to 57 points in March.

Following a sharp decline in the previous month, the supplier deliveries index surged higher in March, indicating longer lead times for ordered goods to arrive. This was likely caused by continued supply chain frictions and perhaps even shortages of raw materials (as was reflected in the 2021 Q1 Absa Manufacturing Survey). However, more positively, this could to some extent also be driven by demand from manufacturers picking up by more than expected, resulting in suppliers struggling to keep up. This is also observed in some international PMI surveys. Given the uncertainty of exactly what drove supplier deliveries higher, the elevated level of the overall PMI in March may be overstating the robustness of underlying conditions in the manufacturing sector. This is notwithstanding the strength shown in some of the other sub-components.

Finally, as flagged in the February Absa PMI release, price pressure continues to build at the start of the production process. The purchasing price index rose to 89 points in March. This is a five-year high and almost 20 points above December’s reading. After a hefty fuel price increase at the start of the month, a weaker (on average) rand exchange rate and higher Brent crude oil price during the month likely contributed to the sharp increase. The prices of some key input products – such as steel and rubber – have also risen of late. 

• Absa PMI March 2021
• PMI March Infographic 2021

Group provided relief to more than 670,000 customers

*Salient points

• Revenue increased 2% to R81.4 billion 
• Operating costs fell 2% to R45.6 billion
• Cost-to-income ratio improved to 56% from 58%
• Pre-provision profit increased 7% to R35.8 billion
• Impairments increased 163% to R20.6 billion
• Headline earnings declined 51% to R8 billion; R9.47 per share
• Return on equity declined to 7.2% from 15.8%
• Group CET 1 ratio of 11.2%, well above regulatory requirements
• No dividend declared, to conserve capital

*Note: Normalised values are reflected (stripping out the effect of the separation from Barclays PLC)

15 March 2021 

Absa Group Ltd., one of Africa’s largest financial services provider, today reported a 51% decline in normalised headline earnings to R8 billion after impairments nearly trebled to R20.6 billion amid the economic downturn that was precipitated by the COVID-19 pandemic.

Earnings and returns improved materially in the second half of the year as lockdown restrictions eased, particularly in South Africa, which accounts for more than 80% of the group’s earnings. Group headline earnings fell 82% in the first half of 2020 compared with the first half of 2019. Headline earnings in the second half of last year were 19% lower than in the second half of 2019.

As COVID-19 lockdown restrictions were implemented across countries last year, Absa moved swiftly to adopt remote-working, implement payment relief measures for clients, and to launch initiatives to support the communities we serve, while ensuring operational and financial resilience.

“Absa responded decisively to the COVID-19 pandemic and the resulting economic downturn. We supported our staff, customers and communities through a difficult period and produced a resilient financial performance in a very challenging operating environment,” said Daniel Mminele, Absa Group Chief Executive. “We also successfully completed our separation from Barclays and reviewed our strategy to ensure that it continues to be relevant in the context of rapid changes in the operating environment.”

COVID-19 pandemic response

Colleague safety and wellbeing was the immediate priority, following which substantial customer and community support initiatives were implemented.

“We believe we offered the most comprehensive relief programme in the South African banking sector, providing approximately R9.8 billion in cash-flow relief to 613 000 retail and business banking customers,” said Mminele. In addition, Absa waived various transaction fees and provided insurance premium relief, while temporarily extending credit cover to include a wider definition of ‘loss of income’ events.

Absa subsidiaries in countries outside of South Africa extended COVID-19 payment relief to more than 60,000 retail and business banking customers.  

Approximately R54.4 billion in payment relief was extended to corporate and investment banking clients during the year under review. This included interest and/or capital moratoriums, covenant concessions and extensions of maturity dates on expiring facilities.

Absa also mobilised its citizenship programme to support communities across presence markets. Absa and its employees directed R83 million towards COVID-19 response initiatives across the continent.

Financial performance

While credit impairments had a substantial negative impact on earnings, Absa Group’s 2020 financial results indicated positive underlying trends, including a 2% increase in income and strong growth in pre-prevision profit. (Pre-provision profit is profit before setting aside funds for impairments.)

Net interest income growth of 5% stands out, considering large policy rate cuts that reduced Absa’s net interest income in South Africa. However, Absa’s structural hedge released R2.6 billion to the profit and loss statement to partially offset this.

Operating expenses remained well-managed, declining 2%.

Combining resilient revenue growth with lower costs produced positive operating JAWS – a measure of efficiency – of 3%, improving cost-to-income ratio noticeably to 56%.

“I was really pleased with our 7% rise in pre-provision profit as this is an important indicator of positive underlying performance. I believe that we have appropriately prioritised balance sheet strength balanced against selective targeted growth during these uncertain times,” said Jason Quinn, Absa Group Financial Director.

Pre-provision profit growth was evident across Absa Group’s three business units.

Retail and Business Banking South Africa (RBB SA)

While RBB SA’s earnings declined 55%, strong pre-provision profit growth of 6% largely cushioned the business against an increase in impairments.

In a challenging and uncertain period, RBB SA actively supported customers through relief measures including financial advice, proactive customer and community outreach programmes and the provision of comprehensive payment relief.

Many customers signed up for the payment relief programme as a precaution, and by December, the outstanding exposure of loans deferred had reduced significantly as customers resumed payments. A combination of these support programmes, strong equity in mortgages and elevated savings rates, along with a resilient balance sheet, place the business on firm footing as it navigates the next phase of its strategy journey.

At the same time, RBB SA continues to invest, particularly in digital to improve operating efficiencies and the overall customer experience. This is illustrated by a 23% increase in digitally active customers to 1.9 million, largely driven by the mobile app. The app has been consistently the highest-ranking in the market.

Underpinning RBB SA’s performance has been the deliberate decisions taken in 2018 when its transformation journey commenced.

              Corporate and Investment Banking (CIB)

CIB’s headline earnings declined by 17% as impairments increased six-fold. Pre-provision profit increased by 22%, supported by income growth of 14%, with all core operating business units delivering solid revenue growth.

CIB’s completion of separation from Barclays, which involved 44 projects, was a significant milestone, freeing up management time and facilitating the introduction of newer systems.

CIB successfully integrated the custody and trustee business (Absa Investor Services) which was acquired from Société Générale. The US office became operational with all regulatory approvals and licenses secured.

              Absa Regional Operations (ARO)

ARO earnings declined 56%, or 65% in constant currency. Pre-provision profit grew 3% as ARO continued to benefit from its well-diversified portfolio, both by activity and geography.

Completing its separation from Barclays was a significant event for ARO, most of which Absa acquired from Barclays in 2013. It included the largest single data and systems migration in Africa, as customers in nine countries were switched to a new, enhanced online banking system. It also involved a major rebranding of branches and corporate offices, ATMs, point-of-sale terminals, and over 1.2 million customer cards.

Strategy

Absa undertook an in-depth review of the group strategy in 2020, two years after the launch of the 2018 growth strategy, to evaluate execution progress, and to assess relevance given the changes in the operating environment.

“The review process concluded that, while our strategic choices from the 2018 strategy remain relevant, the world in which we seek to achieve them has changed,” said Mminele. “As a consequence, some shifts and accelerations are required to drive the modernisation our business, not only to maintain relevance but to thrive and advance as a business.”

Absa’s refreshed strategy addresses the implications of the evolving operating environment, and will accelerate the growth of the business, as the Group continues to execute and consolidate elements of the 2018 strategy that have been showing traction. Absa will refine its go-to-market approach and execute with agility and speed, keeping the customer at the heart of everything we do.

Strategic shifts are required to ensure that Absa delivers deeper shared value to a broad range of stakeholders, strengthening the Group’s position as a purpose-led organisation. Absa will become even more customer-centric in meeting the specific needs of clients, embrace digital-first distribution channels to match customers’ changing behavioural patterns, and diversify market reach to match customers’ points of presence. 

Areas targeted for acceleration include:

•          Developing and nurturing a more entrepreneurial culture
•          Creating more competitive digital, data, technology and innovation capabilities
•          Leveraging strategic partnerships to create market leading capabilities

To deliver against our refreshed strategy, Absa will invest in strategic capabilities including leadership, a more modernised technology architecture that powers digital transformation and in creating an execution model that promotes faster innovation.

“The Group has delivered respectable progress over the last two-and-half years against the strategy journey that was adopted in 2018, and we have seen good traction in some parts of the business. Our refreshed strategy enables us to become more precise in expressing how we want to embed customer-centricity at the heart of our business, how we will evolve our digital maturity, and what it means to be purpose-led,” said Mminele.

Outlook

There remains substantial uncertainty regarding the global economic recovery, which depends on the roll-out of effective vaccines and additional policy support. However, Absa expects an improved macro-economic backdrop in 2021, which should support financial performance.  

Absa forecasts 3.1% growth in South Africa during 2021 and expects GDP to only recover to 2019 levels by 2024. Absa expects the economy in ARO presence countries to rebound in 2021, with GDP-weighted growth of 4.5%.

“While there is some way to go before economies stabilise, the roll-out of vaccines globally hold the promise of greater stability and we look forward to playing our role in the recovery and re-setting for the future,” said Mminele.

It is with profound sadness that the Absa Group announces the passing of our Executive Director and Deputy Group Chief Executive, Peter Matlare, on 7 March 2021 due to COVID-19-related complications.

Peter joined the Absa Group Limited board as an independent Non-Executive Director in 2011. In August 2016, he was appointed Group Deputy Chief Executive Officer, as well as Chief Executive responsible for Absa Regional Operations, covering our presence on the continent outside of South Africa.

“He played a key role in overseeing our regional operations and safely leading our banks through the major separation from Barclays and rebrand to Absa,” Wendy Lucas-Bull, Absa Group Limited Chairman said.

Peter has made a significant contribution to the Group, and Absa has lost a dedicated leader, a visionary and an amazing human being. More recently, Peter’s leadership was critical in ensuring that the separation from Barclays, a complex multi-year project which also included the largest single data and systems migration in Africa, was successful across Absa’s operations on the continent.

“Peter was a seasoned corporate executive, a good leader, inspirational, and passionate about his work, always strongly invested in the success of our continent. I will miss his friendship, collegiality, guidance and wise counsel,” said Daniel Mminele, Absa Group Chief Executive.

The seasonally adjusted Absa Purchasing Managers Index (PMI) increased to 53 index points in February from 50.9 in the month before. The further increase was supported by three of the five subcomponents gaining relative to January. Only the employment index moved lower, while the supplier deliveries index also ticked down but remained well above the neutral 50-point mark and thus supported the headline figure.

The most encouraging outcome of the February survey was a continued improvement in new sales orders. Following a rise in January, the index rose further to 54.0 index points, which is the best level since October 2020. The improvement was supported by better export sales relative to the previous month, while the loosening of local lockdown restrictions also contributed to an uptick in domestic demand. The improvement in orders supported an increase in the business activity index. Following four consecutive declines, the activity index rose by a sizeable 8.6 index points in February. The increase suggests that production growth reaccelerated after losing steam towards the end of last year. The inventories index also regained all of January’s losses and moved back above the neutral 50-point mark.

Purchasing managers remain relatively optimistic about the six-month outlook, with the expectations index unchanged at 59.2 index points. A factor which may quell sentiment going forward could be continued upward pressure on costs. This is likely, especially if the demand environment remains relatively weak and producers cannot pass on these costs to mitigate some pressure on profitability. Indeed, after a sharp increase the previous month, the purchasing price index rose further. A hefty fuel price increase at the start of February likely contributed to the continued acceleration in cost pressure. Fuel prices are expected to rise further in coming months on the back of a higher Brent crude oil price as well as an increase in fuel levies. A sharp hike in electricity tariffs will also push up costs.

• PMI February Infographic 2021
• Absa Purchasing Managers Index February 2021

Absa Group today pledged R10 million to the newly-established Gender-Based Violence and Femicide (GBVF) Private Sector Response Fund, and will also provide free banking services to the fund for 12 months.

Launched by President Cyril Ramaphosa, the Fund seeks to bring together all sectors of society and will serve as a vehicle to mobilise resources to support and enable scalable programmes, targeting both prevention and response to GBVF across South Africa.

“Gender-based violence does not only hurt its direct victims, but society as a whole. At Absa we recognise that as a large organisation it touches the lives of people from all walks of life, and we have a responsibility to play a shaping role in our society,” said Absa Group Chief Executive Officer Daniel Mminele.

Absa will also provide further support to the fund in the form of:

• Project management capacity for the establishment of the Fund;
• Designing and setting up a website and basic marketing activities and;
• Developing a donation and disbursement process – in conjunction with the administrator.

“Gender-based violence is not just a law enforcement problem, but a problem for all of society that demands everyone to respond meaningfully and consistently in order for women and girls to be safe at all times” Mminele said.

Absa’s pledge to the GBVF Response Fund builds on various initiatives undertaken in 2019 and 2020. Some of the initiatives have included signing up to the UN’s HeforShe programme, working with men in communities and within Absa to break the cycle of violence, hosting a number of dialogues around gender-based violence, and collaborating with various institutions to ensure a portion of public procurement spend is earmarked for women-owned businesses.

Absa’s pledge will contribute towards changing social norms and behaviour, as well as broadening access to justice for victims.

Absa Group has been selected to serve on the Payment Card Industry Security Standards Council’s (PCI SSC’s) Board of Advisors in 2021 and 2022. In this role, Absa is able to help shape the development of payment data security standards and programmes globally.

The PCI SSC leads a global, cross-industry effort to increase payment security by providing industry-driven data security standards and programmes that help businesses detect, mitigate and prevent cyberattacks and breaches. Absa Group Chief Security Officer Sandro Bucchianeri will represent Absa on the board for the third consecutive year.

Absa is one of 31 board members, alongside Google, Apple, Amazon and the European Card Payment Association among other organisations. As strategic partners, board members bring industry, geographical and technical insight to PCI SSC plans and projects.

“The Board of Advisors provides industry expertise and perspectives that influence and shape the development of PCI Security Standards and programmes. We look forward to working with Absa in our efforts to help organizations secure payment data globally,” said PCI SSC Executive Director Lance J. Johnson

Separation technology programme receives high commendation in “Best Tech Overhaul” category

Absa Group, one of Africa’s largest financial services providers, won first place in the ’Fintech for Good’ category at the 2020 Banking Tech Awards ceremony yesterday, in recognition of its South African-based Cybersecurity Academy initiative.

Absa’s technology separation from Barclay’s PLC, which included the single largest data and system migration in Africa, received a high commendation in the ’Best Tech Overhaul’ category. The awards programme, hosted by FinTech Futures, a UK-based digital publishing platform, recognises excellence and innovation in the use of IT in financial services worldwide, as well as the people who make it happen.

The Absa Cybersecurity Academy, established in partnership with the Maharishi Institute, provides cybersecurity training for marginalised youth in Johannesburg and Cape Town, with the aim of securing work placements with affiliated organisations.

Says Sandro Bucchianeri, Group Chief Security Officer at Absa, “Since a young age, I have been incredibly passionate about security. COVID-19 has shown us more than ever how important it is, and addressing the global shortage of cybersecurity professionals is an urgent challenge. Absa’s Cybersecurity Academy means a great deal to me; it contributes to the efforts to break the cycle of poverty and build the resilience of organisations across the country.”

To find out more about the Absa Cybersecurity Academy, watch the video here.
For more about the technology separation programme, watch the video here.

Absa advises that an employee has unlawfully made selected customer data available to a small number of external parties. The leaked data relates to a small portion of Absa South Africa’s customer base to date, although investigations continue.

Upon discovering the contravention, Absa secured High Court orders that enabled search and seizure operations at various premises and secured all devices containing the data. The data on these devices was subsequently destroyed.

Absa has enhanced the monitoring of customer accounts that have been affected to date, and we will contact customers directly.

Absa has brought criminal charges against the employee, and internally the requisite consequence management has been undertaken. Absa may take further action in relation to the recipients of the data once the full scope of the leak is identified and all investigations are completed.

Absa has put in place additional control measures to minimize the risk of reoccurrence in future.

The Absa Purchasing Managers’ Index (PMI) (link to attached PMI Report – November 2020.pdf) declined to 52.6 index points in November from the solid 60.9 points recorded in October. The decline comes after three consecutive upward moves and brings the index to the lowest level since July 2020. While still signalling an improvement in business conditions, the drop suggests that the manufacturing sector’s recovery is starting to lose momentum. This was to be expected as output levels for many subsectors are nearing pre-pandemic levels and will need sustained demand growth to fuel a further output expansion. In this regard, it was worrying to see the new sales orders index dip back below the neutral 50-point mark for the first time since May. This was in part driven by a renewed decline in export sales, which could possibly be linked to lower activity in Europe due to the renewed COVID-19 lockdowns. This, as well as concerns about coronavirus developments in South Africa, likely explains why purchasing managers turned less positive about business conditions going forward. The indicator tracking business conditions in six months’ time dipped for a second month to 52.7 index points and is now about 12 points below the level of just two months ago. While positive news regarding vaccine developments may result in an improved global growth outlook over the medium term, the next six months remain highly uncertain. 

In addition to the new sales orders index, the other four components of the headline PMI also declined relative to October. However, encouragingly, both business activity and inventories still signalled expansion. Even so, the fact that both indices fell by about 10 points suggests that the pace of the recovery has slowed significantly. Furthermore, the employment index dipped lower in November. Unlike the other indices, employment never breached the neutral 50-point mark in its recovery from the lockdown-induced slump in April. The supplier deliveries index remained high in November, suggesting that supply chain and product availability are still constraints.

Finally, the purchasing price index came down from a two-year high reached in October. The deceleration in cost pressure was likely driven by the, on average, stronger rand exchange rate which lowers the rand-cost of imported raw materials and intermediate goods.

Please note that the December 2020 PMI will be released on 8 January 2021. Due to the December holidays, we don’t release it on the first working day of the month as usual.

• Absa PMI November 2020
• PMI November Infographic 2020