South African 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 on Wednesday.
• The seasonally adjusted PMI sponsored by South African 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 U.S. 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.
- South Africa’s manufacturing PMI dropped to 47.3 in June from 50.8 in May, indicating worsening business conditions.
- Weaker demand led to reduced new orders, as some clients delayed purchases expecting lower prices.
- Lower global oil prices, following a U.S.-Iran interim deal, eased price pressures and boosted future business confidence.
- The purchasing prices component fell sharply, suggesting April and May were the peak for cost pressures.
- Optimism about ending the Iran conflict was tempered by concerns over nationwide anti-migrant protests impacting factory sentiment.
