Manufacturing PMIs See Improvements in May

SOUTH AFRICA ABSA MAY MANUFACTURING PMI 54.8 (FCST 50.7); APR 50.7

SOUTH AFRICA MAY MANUFACTURINGS&P GLOBAL PMI 50.7 (FCST 49.8); APR 50.3

• Wednesday's South Africa Absa manufacturing PMI recovered 4.1 points in May, beating consensus forecasts which saw it unchanged from the previous month's reading of 50.7.
• Today's S&P Global PMI reading also pointed towards recovery, rising a softer 0.4-points, also above the forecasted 0.5pp fall into contractive territory.
• The uptick in output and new orders was the key driver of May improvements, with output seeing its first increase since February.
• Following inflation running hot at 5.9% in April, business confidence weakened to a July 2021 low as firms noted demand softening and difficulties passing on higher operating costs. Sentiment on the whole remained upbeat and supply chain pressures saw some easing.
• The May surveys follow a steep 9.3-point decline to 50.7 seen in the April Absa print, as South African manufacturing slipped to just above the break-even point of 50 to remain in expansionary territory. April floods which saw substantial infrastructure damage in the KwaZulu-Natal province were largely responsible for the decline as production in the region was halted. This will likely continue to soften manufacturing growth in the upcoming months.