South Africa: PMI drops further in March

The Standard Bank Purchasing Managers’ Index (PMI) decreased from 49.1 in February to 47.0 in March, thus plummeting to the lowest level since July 2014. As a result of the decrease, the index is now further below the 50-threshold, which separates expanding from contracting conditions in business activity.

March’s deterioration mainly reflected that output in the private sector and new orders dropped at a steeper rate compared to the previous month. However, conditions in the labor market deteriorated and employment dropped at a record rate. Analysts added that, “overall input prices remained elevated despite the pace of inflation slowing between February and March, with both purchase costs and staff costs increasing at decelerating rates. Notably, employment fell into contractionary territory after briefly surpassing the 50 points threshold in February. Output prices also increased at a slower pace in March.”

FocusEconomics Consensus Forecast panelists see investment rising 2.0% in 2016, which is unchanged from the previous month’s estimate. For 2017, the panel expects industrial production to increase 1.6%.