BUSINESS MAVERICK: Absa PMI perks up in August, but suggests manufacturing jobs are still being shed

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The August reading for the widely watched Absa Purchasing Managers Index is the latest data set to suggest a rebound in economic activity since the second quarter crash from April until the end of June. Worryingly, it indicates that manufacturing jobs are still being shed.

The Absa Purchasing Managers Index is weighted so that 50 is regarded as the “neutral” threshold. A measurement of the expectations of business managers, it had plunged to 5.1 in April amid the economic meltdown and uncertainties of the first full month of hard lockdown.

“As a result, both business activity and new sales orders rose in August. The improvement in demand was not only due to South Africa moving to a lower lockdown level, but was also supported by an uptick in export orders,” Absa said. And on the jobs front, the situation remains very bleak, with the employment index — one of six components of the overall index — still far below the others.

That is a massive concern as the unemployment rate in the first quarter of 2020 stood at 30% and has unquestionably surged since. Manufacturing remains a key employer and a sector the government has long tried to talk up with limited success.

 

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