The first batch of high-frequency data for December showed an easing of economic activity in the final month of 2021, the Bureau for Economic Research (BER) reports in its first weekly assessment for the New Year.
“Both the Absa and IHS Markit Purchasing Managers’ Indices (PMIs) for South Africa lost ground in December,” the Bureau says.
“The Absa manufacturing PMI declined by 3.1 points to 54.1.
“There were some noteworthy movements in the key PMI subcomponents, with the employment index down by eight points (to 42.4) as the business activity index also dropped below the key 50 mark.”
The Bureau adds that respondents turned more downbeat about future business conditions.
“To be sure, the index measuring expected business conditions declined for the third month in a row (to 53.1).
“On the cost front, the purchasing price index rose further to 89.8, the highest level since early 2016.”
As for the IHS Markit SA PMI, at 48.4 last month, it slipped to below the neutral 50 mark in December, down from 51.7 recorded in November.
“The IHS Markit PMI averaged 49.6 in 2021Q4, up from 48.9 in Q3.
“The fact that the index remained below 50 in Q4 (4th quarter) reflects the adverse impact on activity from load-shedding in October and November, the prolonged steel sector strike in October, the Omicron-driven fourth Covid-19 wave, and the associated (unwarranted) global travel bans to and from SA.”
The Bureau emphasises that “in sum, the PMI data supports our view that while Q4 real GDP should bounce back from the notable quarterly contraction in Q3, the recovery is unlikely to undo the output loss in Q3”.
