South Africa PMI Drops for Third Month as Mine Unrest Persists
South Africa’s purchasing managers’ index fell for a third month in October, indicating a slump in manufacturing, as mining strikes persisted and demand from Europe and China waned, Kagiso Tiso Holdings said.
The seasonally adjusted index declined to 47.1 from a revised 48.3 in September, Johannesburg-based Kagiso said in an e-mailed statement today. An index level below 50 indicates a contraction in factory output.
Strikes that have shut mines owned by Lonmin Plc (LMI) and Anglo American Platinum Ltd. cut gold and platinum output by 10.1 billion rand ($1.2 billion) this year, according to the National Treasury. Africa’s largest economy is set to expand 2.5 percent this year, down from 3.1 percent in 2013, as labor unrest and Europe’s debt crisis lower demand for manufactured exports.
“The prolonged strikes in the mining sector through October and isolated industrial action in the vehicle manufacturing sector may have contributed to the weakness in the South African PMI during the month,” Andre Coetzee, managing director of the Chartered Institute of Purchasing and Supply, which conducts the survey on behalf of Kagiso, said in the statement.
The median estimate of three economists surveyed by Bloomberg was for the index to reach 46.5.
The Reserve Bank on Sept. 20 held its benchmark repurchase rate at 5 percent, the lowest level in more than 30 years, to help bolster the economy. The deficit on the current account, the broadest measure of trade in goods and services, widened to 6.4 percent of gross domestic product in the second quarter, the highest in almost four years, as exports slumped.
The index measuring business activity dropped 3 points to 43.2, while the new sales orders index declined 3 points to 45.3, Kagiso said. The employment index rose to 49.2 from 47.9 in September, while a price sub-index increased 1.3 points to 75.8, it said.
The Bureau for Economic Research, based at the University of Stellenbosch near Cape Town, conducts the PMI survey along with the institute on behalf of Kagiso.
The data was revised due to an annual recalculation of seasonal factors used to adjust the index.
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