Businesses have benefited from normalisation of demand after the July riots and the easing of Covid-19 lockdown restrictions. 

Absa has, however, warned that economic activity in the third quarter would still be lower. 

“The extent of the rebound is nonetheless encouraging, especially on the orders and activity front,” Absa said in the release. 

“That being said, even if September’s headline PMI print remains at the elevated level seen in August, the third quarter as a whole will be lower than the second quarter due to the severity of the shock experienced in July.” 

The survey, conducted by the Bureau for Economic Research on behalf of Absa, measures monthly sentiment in the manufacturing sector. An index score above 50 indicates growth in factory activity, while a figure below indicates a decline.   

The looting and violence of July, which claimed more than 350 lives and cost about R50-billion in lost business and destroyed infrastructure, combined with the cyberattack on Transnet that crippled port operations in Durban, came just as South Africa was reaping the rewards of a global boom in demand for commodities like platinum, coal and palladium, and will almost certainly dim the blockbuster GDP numbers South Africa needs to make a serious dent in its budget deficit and debt figures.

The bounce-back in August, however, offers a glimmer of hope. 

The survey showed a strong recovery in the sub-indices for business activity and new sales orders, with each 30 points higher than the July figure. Inventories also recorded a healthy recovery, suggesting factory owners were more confident of future business, although Absa cautioned that “these movements reflect month-on-month changes from an extremely weak July”.

Africa analyst at Capital Economics, Virág Fórizs, echoed that caution, warning that supply chain disruptions had “only eased a touch”, and that deeper structural issues would continue to crimp potential growth. 

“We think that the rebound in manufacturing activity over the coming months will remain sluggish. Key headwinds, including power cuts and the government’s fiscal consolidation plan, persist,” said Fórizs in a note.

The Reserve Bank last month said the riots and looting had forced it to keep its GDP growth forecast for 2021 at 4.2%, rather than raising it on the back of the commodity boom. Stats SA publishes second-quarter GDP numbers on Tuesday. The economy grew 4.6% on an annualised basis between January and March. BM/DM