South Africa’s Absa PMI declines in December after power cuts

JOHANNESBURG (Reuters) – South Africa’s seasonally-adjusted Absa Purchasing Managers’ Index (PMI) fell deeper into a contraction in December, following a slump in new sales orders and business activity due to power cuts, the survey showed on Wednesday.

The index, which gauges manufacturing activity in Africa’s most industrialised economy, fell to 47.1 points in December, from 47.7 in November. Anything below 50 indicates that activity is contracting rather than expanding.

Absa said some respondents for the December survey said production was lost due to electricity disruptions.

“Bouts of load shedding (power cuts) and persistent weak domestic demand coupled with more intense headwinds from the global economy likely weighed on activity during the year,” Absa said in a statement.

South Africa’s state-owned power utility Eskom has struggled to meet demand since 2007 due to unreliable coal-fired power plants, forcing it into rounds of power cuts, locally known as “load shedding”.

Eskom, which generates more than 90% of South Africa’s power, is widely viewed as the biggest impediment to economic growth.

Reporting by Olivia Kumwenda-Mtambo; Editing by Tim Cocks

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