(Reuters) – South African manufacturing activity expanded at a faster pace in May, as new sales orders recovered following the floods in the KwaZulu-Natal province in April, a survey showed on Wednesday.
The seasonally-adjusted Absa Purchasing Managers’ Index (PMI) rose to 54.8 points in May from 50.7 points in April, remaining above the 50-point mark that separates expansion from contraction.
Absa said in a statement that domestic demand normalised and export sales returned to positive terrain following the floods in KwaZulu-Natal, which killed more than 400 people, causing significant damage to infrastructure and port operations in Durban.
But Absa warned that the April-May average for the business activity index is well below 50 points and could mean that the actual manufacturing output may record a quarterly contraction in the second quarter.
“Despite the solid rebound in demand, business activity was stuck just below the neutral 50-point mark in May. This could be due to continued load-shedding and industrial action affecting output, but not necessarily weighing on demand,” Absa said.
State power utility Eskom regularly implements scheduled power cuts, locally known as “load-shedding”, as it struggles with breakdowns at its generation units.
(Reporting by Bhargav Acharya in Bengaluru; Editing by Olivia Kumwenda-Mtambo)
