The seasonally adjusted Absa Purchasing Managers’ Index (PMI) fell to 45.0 points in March from 46.2 in February. This was the third consecutive month of decline. As was the case in February, two of the PMI’s major subcomponents came in above 50 points, while three were stuck in negative terrain. However, all but one of the main subindices declined compared to February.

The new sales orders index edged lower by 0.5 points to reach 42.4 in March. For the first quarter, the index suggests that demand was weaker than during the fourth quarter of 2018. This seems to stem from a deterioration in export performance while domestic demand conditions also remained poor.

Exporters are faced with slower global growth, particularly in the Eurozone which is a key trading partner. A preliminary reading of the Eurozone manufacturing PMI fell to the lowest level since 2014 in March. Weaker demand likely contributed to a further dip in the business activity index to 41.7 points. Output was likely also affected by consecutive days of (daytime) load shedding, hampering production for factories without alternative power sources. On the back of a further dip in output, the employment index declined by 5.4 points to reach 42.7 in March.

After five months of decelerating cost increases, the purchasing price index ticked up to 74.3 in March. The acceleration in cost pressures was likely due to the sharp fuel price hike at the start of the month, as well as the weaker rand exchange rate during March compared to February.

For a second month, respondents scaled back their optimism about business conditions going forward. The index measuring expected business conditions in six months’ time fell to 59.6 in March from 65.9 in February.