S.Africa's Absa PMI falls in March as strong rand hurts exports

JOHANNESBURG (Reuters) - South Africa’s seasonally adjusted Absa Purchasing Managers’ Index fell sharply in March as business activity, new sales and inventories all declined, a survey showed on Tuesday, with the stronger rand hurting exports.

The index, which is compiled by the Bureau for Economic Research and gauges manufacturing activity in Africa’s most industrialised economy, fell to 46.9 in March from 50.8 in February, its lowest reading since December.

“Exports could be affected by the stronger rand exchange rate of late, which can weigh on competitiveness of local goods in international markets. The dip in demand, in turn, filtered through to lower activity levels,” the survey said.

South Africa’s rand has been among the best performing emerging market currencies this year, advancing about 20 percent against the greenback since November.

The rally in the currency has also seen the current account deficit widen to a larger than expected 2.9 percent of GDP in the fourth quarter.

The replacement of scandal-plagued Jacob Zuma with President Cyril Ramaphosa in February and his subsequent pledge to fight corruption and implement reforms has revived optimism about South Africa’s economy.

The index fell below the 50 mark, which divides expansion from contraction, after growing for the first two months of the year as optimism around the policy and political changes spurred business activity.