South Africa’s PMI Falls as Strikes Hit Manufacturers

South Africa’s purchasing managers’ index unexpectedly dropped below 50 in September for the first time in six months, indicating a contraction in manufacturing, as strikes hit output, Kagiso Tiso Holdings said.

The seasonally adjusted index fell to an eight-month low of 49.1 from 56.5 in August, Johannesburg-based Kagiso said in an e-mailed statement today. The median estimate of seven economists surveyed by Bloomberg was 54.

Manufacturers including Toyota Motor Corp. (7203), Volkswagen AG (VOW) and General Motors Co., face a loss in revenue of about 20 billion rand ($2 billion) after 30,000 workers held a 15-day strike in August to demand higher wages. Labor stoppages have also disrupted output in the gold mining and construction industries in the past two months.

Threats of future strike action may be “weighing on manufacturers,” Abdul Davids, head of research at Kagiso Asset Management, said in the statement.

Members of the Association of Mineworkers and Construction Union halted work on Sept. 27 at Anglo American Platinum Ltd. mines to protest planned jobs. Finance Minister Pravin Gordhan said on Sept. 27 that prolonged strikes are damaging to the economy and job creation.

The index measuring business activity dropped 12.5 points to 46.7, Kagiso said. The new sales orders index lost 9.4 points to 48.1 and the index measuring expected business conditions in six months’ time fell 4 points to 51.8.

The Bureau for Economic Research, based at the University of Stellenbosch near Cape Town, conducts the PMI survey on behalf of Kagiso.

To contact the reporter on this story: Rene Vollgraaff in Johannesburg at rvollgraaff@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria at nseria@bloomberg.net

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