In January, Absa’s PMI rose to 50.9 from 50.3, the bank said on Monday. This on the surface is positive, but there is still a lot of negativity in the numbers. 

“While up on the month before, the January reading is much lower than the average recorded in the final quarter of 2020. Indeed, the business activity index declined for a fourth consecutive month which points to a further loss in the recovery momentum,” Absa said in a statement. 

“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,” it said. 

The new sales index crept up two points to 47.2, but remains below the neutral threshold of 50. 

“Even with the uptick, the current level of the index continues to point to constrained demand conditions,” Absa noted. 

The employment index jumped almost five points to 48.6 from  43.8. But Absa cautioned that this does not mean that the manufacturing sector is adding jobs as the number is still in negative territory. Rather, it suggests that the pace of job losses is slowing. So perhaps the jobs bloodbath has been reduced to a trickle. 

The supplier deliveries index rose almost five points to 68.9, but this may not be a positive development. This is an index which can go up because things are down. 

“If goods are less readily available and purchasing performance worsens, this is normally a sign of increased demand for manufactured products and actually lifts the index. However, other factors, such as lockdowns and production stoppages in the domestic economy or in trading partners, can also distort the supply chain and inadvertently lift the index,” Absa said. DM/BM