Bloomberg News

South Africa PMI Sinks to Two-Year Low on ‘Prolonged’ Strikes

August 01, 2011

Aug. 1 (Bloomberg) -- South Africa’s purchasing managers’ index declined to a two-year low in July as “prolonged” strikes curbed manufacturing operations in the continent’s biggest economy, Kagiso Tiso Holdings said.

The seasonally adjusted index dropped for a fourth month, falling to 44.2 from 53.9 in June, Johannesburg-based Kagiso said in an e-mailed statement today. A reading below 50 indicates a contraction in factory production.

“The decline in the PMI can to a degree be explained by prolonged strike activity in the manufacturing sector during July,” Kagiso Asset Management’s Head of Research, Abdul Davids, said in the statement. The labor action pushed the business activity sub-index down 19.3 points to 35.9, he said.

An 18-day strike by petroleum, chemical, engineering and packaging workers curbed factory production and interrupted supplies from refineries owned by Sasol Ltd., Royal Dutch Shell Plc and BP Plc this month, causing fuel shortages. In a separate work stoppage, about 320,000 metalworkers downed tools for two weeks.

Manufacturing, making up 15 percent of the economy, slumped in April and May after helping drive economic growth in the first quarter. Factory output grew 0.2 percent in April and 0.6 percent in May compared with the same months a year earlier, according to Statistics South Africa.

Factory job prospects “remain dire” with the employment index slipping 8.6 points to 39.1, Kagiso said.

South Africa’s jobless rate, the highest of 61 countries tracked by Bloomberg, increased to 25.7 percent in the second quarter as the number of people without work surged by 174,000.

--Editors: Gordon Bell, Nasreen Seria

To contact the reporter on this story: Franz Wild in Johannesburg at

To contact the editor responsible for this story: Andrew J. Barden at

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