South Africa: PMI dives to record-low in April due to Covid-19
The South Africa IHS Markit PMI nosedived to an all-time low of 32.5 in May, from 35.1 in April. As a result, the index plummeted further below the critical 50-threshold, suggesting that manufacturing sector activity declined from the previous month at the fastest pace on record.
The plunge was spearheaded by record declines in both output and new orders as coronavirus-related business closures and lockdowns severely dented customer client demand. Consequently, backlogs of work shrank and employment fell at the quickest pace in the survey’s history. In a similar fashion, business confidence turned negative in May, while input costs fell due to slack demand, with firms passing this reduction over to their clients through markedly lower output prices.
Commenting on the private sector outlook, David Owen, an economist at IHS Markit, said:
“The government has sought to reopen large parts of the economy in June, which may lead to a strong bounce-back in PMI readings if businesses are able to restart quickly. However, the large drop in employment seen in May is worrying, as firms may struggle to operate at capacity levels seen pre-COVID-19 […] Business sentiment regarding the 12-month outlook for activity turned negative for the first time in the series. As such, firms are increasingly concerned that the extended lockdown period may hurt business activity for some time.”