- Load shedding and lockdown Level 3 are expected to have weighed on production, knocking the liquor- and hospitality-related industries in particular.
- January's PMI edged up slightly to 50.9 points, but it is still lower than the fourth-quarter average of 2020.
- However, job losses in these sectors appear to have slowed down.
Load shedding and the extended Covid-19 lockdown in January are expected to have weighed on production levels, particularly in the liquor and hospitality industries, the latest Purchasing Managers' Index (PMI) reveals.
January's PMI – a measure of economic activity in the manufacturing sector – released on Monday, edged up slightly to 50.9 index points, from 50.3 points reported in December. However, the reading is still below the average recorded for the final quarter of 2020.
Values above 50 indicate increased activity and values below 50 indicate decreased activity.
"The bout of load shedding mid-month may have weighed on production in January. In addition, the adjusted Level 3 lockdown regulations would have negatively affected production in the liquor- and hospitality-related industries in particular," the index report read.
In addition, the business activity sub-index declined for a fourth consecutive month – to 43.5 points from 44.9 points recorded in December. This reflects a further loss in the recovery momentum.
The new sales orders sub-index rose slightly to 47.2 points in January from 45.2 points recorded the previous month.
"This was despite a further deterioration in export sales, which suggests it was supported by a reduction in the rate of decline in domestic demand instead," the report read. It is still below 50 and reflects "constrained demand conditions".
Fewer jobs lost
The pace of job shedding in the sector also seemed to have slowed, with the employment sub-index rising from 43.8 points to 48.6 points.
The supplier deliveries sub-index also increased – to 68.9 points from 64 points reported in December - which indicates supplies are less readily available, possibly due to supply chain disruptions during the month. "This is likely not only due to local restrictions, but also tight(er) lockdown regulations in the rest of the world," the report read.
According to the report, purchasing managers are optimistic about the future operating environment – possibly linked to the prospects of an improved global economy during the second half of the year. This should boost exports, the report read.
The International Monetary Fund expects the world economy to grow by 5.5% on the back of Covid-19 vaccine distributions, Fin24 previously reported.