South Africa: PMI falls to 11-month low in July
August 4, 2021
The IHS Markit Purchasing Managers’ Index (PMI) fell to 46.1 in July from June's 51.0, marking the worst reading since August 2020. As such, the index dropped below the 50-threshold for the first time in ten months, signaling a deterioration in business conditions from the previous month.
July’s downturn was largely driven by a decline in business activity, which fell at the fastest rate in 14 months amid social unrest, lockdown measures and raw material shortages. Moreover, new orders contracted for the first time in four months and at the quickest pace in a year, while employment also fell in the month. On the price front, input cost inflation fell to the lowest in four months, albeit remained elevated overall as shortages continued to exert upward pressure on prices. In addition, output charge inflation also eased from the previous month. Lastly, firms’ confidence weakened notably in July, albeit they still project output to strengthen in the coming twelve-month period as the effects of the pandemic and social unrest wear off.
Author: Hanna Andersson, Economist