South Africa’s purchasing managers’ index was little changed in May, indicating demand for manufactured goods remains under pressure in Africa’s largest economy, according to Kagiso Tiso Holdings.
The seasonally adjusted index fell to 53.6 from 53.7 in April, Johannesburg-based Kagiso said in an e-mailed statement today. A reading above 50 indicates an expansion in factory output. The median estimate of six economists surveyed by Bloomberg was for the measure to decline to 52.6.
The new sales orders index fell 3.7 points to 51.7 in May, which “reflects a rapid deterioration in demand for locally produced goods,” Abdul Davids, head of research at Kagiso, said in the statement. “Inventories are too high relative to the demand for manufactured goods and suggests a possible further easing in headline PMI in the coming months.”
Factory output contracted for the first time in eight months in March as the debt crisis in Europe cut demand from a region that buys about a third of manufactured exports. The manufacturing industry makes up about 15 percent of Africa’s largest economy.
The business activity sub-index declined to 56 in May from 57.7 in the previous month, Kagiso said.
A weaker rand is adding to manufacturers’ costs, pushing up the PMI price sub-index by 2.5 points to 73.6 last month. The currency has slumped 10 percent against the dollar since the beginning of April and was trading as low as 8.5704 today.
The Bureau for Economic Research, based at the University of Stellenbosch near Cape Town, and the Institute of Purchasing and Supply South Africa conduct the PMI survey on behalf of Kagiso.
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