South Africa’s seasonally adjusted Purchasing Managers’ Index (PMI) dropped by 2.9 points to 47.4 in April, its lowest level since July 2011, Kagiso Tiso Holdings, which sponsors the survey conducted by the Bureau for Economic Research (BER) and CIPS Africa, said in a statement. The country’s manufacturing industry has thus not only swung back to below the 50 mark that signals contraction, but is also underperforming developed economies, with the ISM manufacturing index in the US rising to 54.9 from 53.7 and the Eurozone manufacturing PMI standing at 53.4, its 10-th consecutive month above 50. Peer China also performed better with preliminary manufacturing PMI rising to 48.3 in April from an eight-month low the month before.

Among the headline PMI’s components, the new sales orders index fell by 3.1 points to 43.5, remaining below 50 for a second month in a row, as an ongoing for more than three months now strike in the platinum mining sector has cut orders to mine suppliers. The prolonged strikes over pay shut mines operated by the world’s top three platinum producers - Anglo American Platinum (Amplats), Impala Platinum (Implats), and Lonmin – and forced the three companies to declare force majeure on a number of suppliers.

Another notable development in April is an unexpectedly sharp drop in the price sub-index - to 79.3 from 93.0 in March. According to Andre Coetzee, Managing Director of CIPS Africa, the moderation in the growth rate of input prices reflects an easing in the diesel price in April, as well as the slight appreciation of the local rand currency. According to the latest available data from Statistics South Africa, producer prices rose 8.2% y/y in March, speeding up from a 7.7% y/y growth in February and an average rise of 6.0% in 2013.

The business activity sub-index, which rose to above 50 for the first time in three months in March, returned back to the contraction zone, falling by 2.5 points to 48.5 in April, indicating a continuous slowdown in production since December 2013.

While the index measuring expected business conditions in six months’ time edged down by 0.3 points to 54.2, the PMI Leading Indicator (the ratio between new sales orders and inventories) fell further to a level below 1, implying that inventories are relatively high compared to the demand for manufactured goods, which does not bode well for production going forward.