South African manufacturing sector is struggling on account of the unprecedented type six load shedding. This has added to the woes of the sector, which is undergoing one of the worst trajectories in its history. Global slowdown blues abetted by the US-China trade war had its impact on the belaboured South African economy. When that is bottoming out aided by the recent thaws on the standoff between the two countries, it is expected that the US–Iran war threat would play havoc on the South African economy since in the fuel cost will go north due to the anticipated increased sanctions on Iran by the Western countries. .
As a result, the Absa Purchasing Managers’ Index (PMI), which monitors the manufacturing and business activity in the country, fell for a second month in December to 47.1index points from 47.7 points recorded in November. The Absa sponsored index is worked out by the University of Stellenbosch’s Bureau for Economic Research (BER). The monthly indicator takes into account purchasing managers’ sales orders, their inventories, employment and a few other variables.
The index declined both in November and December. The declining trend in September, when PMI nosedived and reached a ten-year low, was the steepest. Though it picked up in October, the trend could not be sustained in the subsequent months. Any reading of PMI above 50 is considered positive, indicating the economy is expanding and below that is considered to be negative, indicative of contraction in the economy. PMI only managed to rise above 50 points for two months in 2019. Business activity, one of the parameters in calculating the PMI, fell to the lowest level since April 2017. Load shedding is the major reason behind production decline, according to experts
