Manufacturing activity in SA declines in June

JOHANNESBURG - Employment creation in the manufacturing sector is set to remain low. The latest factory activity in South Africa has fallen to a two year low.

Absa's latest Purchasing Managers’ Index has shown a 1.6% decline to 47.6 in June.

For the first time since 2018, all five subcomponents used to calculate the manufacturing activity were below the neutral 50-point level, pointing to a worsening of business conditions in manufacturing.

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A key drag on the sector seems to come from weak demand, with the new sales orders index coming down as export sales continue to decline.

Domestic demand also remains under pressure but the business activity index improved on the back of significantly fewer blackouts during the month.

Along with the improvement in business activity in May, there was also somewhat better news on the cost front.

The purchasing price index declined to the lowest level since the beginning of this year thanks to the stronger rand and a drop in the fuel price.