South African (SA) manufacturing sentiment deteriorated in June as weaker demand weighed on new orders, though lower oil prices boosted confidence about future business conditions, a purchasing managers’ index (PMI) survey showed this Wednesday.
The seasonally adjusted PMI sponsored by SA bank Absa fell to 47.3 points from 50.8 in May.
A reading below 50 indicates a deterioration in overall business conditions for manufacturers.
Absa said the survey was conducted after the United States and Iran agreed an interim deal to end hostilities and reopen the Strait of Hormuz, which brought down global energy prices.
A sharp fall in the PMI component on purchasing prices “suggests that April and May may have marked the peak of price pressures,” particularly following fuel price cuts that took effect on Wednesday.
Some respondents said clients were postponing purchases in anticipation of lower prices, contributing to a drop in new orders, Absa said.
A sub-index tracking expected business conditions in six months climbed, reflecting optimism the Iran war could end. But some respondents flagged nationwide anti-migrant protests on June 30 as a concern, preventing a stronger improvement in the factory mood.
—Reuters—
