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Floods, power cuts weigh on South African factory activity in April – PMI

SOUTH AFRICAN private sector activity expanded at a slower rate in April as power cuts and floods in KwaZulu-Natal province weighed on output and new orders, a survey showed.

The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 50.3 in April from 51.4 in March, dropping to its lowest in four months. A reading above 50 shows growth in the sector.

“While global supply constraints were exacerbated by COVID-19 lockdown policies in China and the Russia-Ukraine war, severe floods in the KwaZulu-Natal province contributed to a further sharp decline in vendor delivery times,” said David Owen, an economist at S&P Global.

“Firms also faced severe rounds of load shedding (power cuts) that led to a stronger fall in output volumes.”

In April, floods in the coastal province of KwaZulu-Natal killed more than 400 people, damaged infrastructure and disrupted operations at Durban, one of Africa’s busiest ports.

Owen added that new orders data showed clients were increasingly struggling with rising prices in April, with higher fuel prices a particular concern for both businesses and households, while a weaker rand added to total import costs.

This contributed to a decline in sales for the first time in three months.

“With businesses facing the prospect of further load shedding, sharp cost inflation and supply side problems, output growth is expected to be subdued in the near term,” Owen said.

“Nevertheless, South African businesses continue to forecast a rise in activity over the 12-month period that will likely be driven by a bounce-back in demand from the pandemic.”

By The African Mirror

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