According to a study released on Wednesday, manufacturing activity in South Africa fell precipitously in February as a result of extreme power outages that markedly worsened market conditions.
For the first time since September 2022, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) plunged below the 50-point threshold separating growth from contraction, dropping to 48.8 points in February from 53.0 points in January.
According to a statement from Absa, all of the indicators measuring business activity, new sales orders, employment, and inventory were in contractionary territory.
Load-shedding, the euphemism for power interruptions, “appeared once again often in the commentary where respondents stated why activity fell comparison to the previous month,” according to Absa.
Due to malfunctions at its coal-fired power facilities, struggling state electricity operator Eskom has instituted power cuts every day this year. This follows a record-breaking number of days with outages in 2016.
The PMI index, which predicts how the business environment will be in six months, had a sharp decline, reaching its lowest point since May 2020.