South Africa’s Q3 whole economy PMI hints at possible recession

By bne IntelliNews October 5, 2015

South Africa’s seasonally-adjusted whole economy Purchasing Managers’ Index (PMI), produced by Standard Bank South Africa, dipped to a 14-month low of 47.9 in September from 49.3 in August, Markit, which compiles the PMI, said in a statement.

The index thus remained below the 50 mark, which signals a deterioration in companies’ operating conditions, for the fourth month in a row. Moreover, at 48.7, the average PMI reading for the third quarter was the worst on record, implying that the economy might be on the brink of recession after contracting 1.3% q/q in Q2. This is in contrast to the central bank’s, as well as rating agencies’ predictions that South Africa’s economy will remain lacklustre, but will escape a recession (determined as two consecutive quarters of GDP contraction).

South African private sector firms reported a continued contraction of output and new orders in September, with the rates of decline accelerating since August, Markit said. Consequently, firms reduced their buying activity and lowered their workforce numbers, with the employment index falling below 50 for the first time since May. Output price inflation reached a four-month high and input costs continued to rise at a robust rate.

“We expect employment in the manufacturing, mining and construction sectors, to be particularly impacted by lower commodity prices and slower domestic and global economic growth,” Standard Bank economist Kuvasha Naidoo said in the statement. He added that the PMI leading indicator (the ratio of new orders to inventory) fell further last month, staying below 1 for the fourth month in a row and thus suggesting that output will likely remain subdued over the short term.

The Standard Bank South Africa PMI covers South Africa’s manufacturing, mining, services, construction and retail sectors.

Last week, data released by the Bureau for Economic Research (BER) showed that South Africa’s seasonally adjusted PMI for the manufacturing industry, sponsored by Barclays, ticked up to 49 in September from 48.9 August, signalling continuing slack and probably further contraction of the sector in Q3.

Related Articles

Almaty cost of living lowest among major cities

Kazakhstan’s largest city and business centre Almaty has dropped to last place on the Economist Intelligence Unit’s bi-annual ranking of the ... more

AB InBev sells 54.5% stake in African Coke bottling business for $3.15bn

Anheuser-Busch InBev will sell a 54.5% stake in Africa's largest Coke bottler to Coca-Cola Company for $3.15bn, the two companies said in a joint statement on December 21. The deal is expected to ... more

IMF slashes South Africa’s 2016 growth outlook to 0.7%

The International Monetary Fund (IMF) has lowered sharply its 2016 GDP growth forecast for South Africa to just 0.7% from 1.3% anticipated in October, its World Economic Outlook (WEO) update released ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:
  • Full access to the bne content daily news and features on the website
  • Newsletters direct to your mailbox
  • Print and digital subscription to the monthly bne magazine
  • Digital subscription to the weekly bne newspaper

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Register for free to read bne IntelliNews Magazine. You'll receive a free digital subscription.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

IntelliNews Pro offers daily news updates delivered to your inbox and in-depth data reports.
Get the emerging markets newswire that financial professionals trust.

"No day starts for my team without IntelliNews Pro" — UBS

Thank-you for requesting an IntelliNews Pro trial. Our team will be in contact with you shortly.

Dismiss