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Marked decline in business activity illustrates true cost of loadshedding | The Citizen

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Just when the supply chain issues that kept the manufacturing sector on the back foot started fading, the cost of loadshedding stepped in.

The true cost of loadshedding is represented by a further decline in the seasonally adjusted Absa Purchasing Managers’ Index , which indicates another tough start for the manufacturing sector after a weak second quarter, with the headline index falling from 52.2 points in June to 47.6 in July.

When the PMI is 50, it means that the sector has not changed when compared to the previous month. Therefore, if PMI is more than 50, the sector expanded and if it is less than 50, the sector has contracted. This PMI is based on a survey conducted by the Bureau for Economic Research at Stellenbosch University and sponsored by Absa.

The purchasing price index signalled the slowest pace of cost increases since the beginning of the year, but the index remains high. However, it does show price pressure at the start of the production pipeline probably peaked earlier this year, which would be consistent with producer and consumer price inflation moving higher in the next several months before it is expected to slow towards the end of the year.

IJssel de Schepper says despite the recent volatility, the index in general has averaged much higher than in recent years. Sustained supply chain friction may have led manufacturers to stock up on input products in order to alleviate possible production disruptions.Supplier deliveries

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