Motoring

Transport nightmare for South Africa

Luke Fraser

 ·1 Sep 2023

Businesses in South Africa have been subjected to major transport disruptions, hurting the overall health of the economy.

While the seasonally adjusted Absa Purchasing Managers’ Index (PMI) saw a slight improvement in August – jumping from 47.3 points in July to 49.7 – sub-indices related to delivery times and employment took a hit.

The index, made in collaboration with the Bureau for Economic Research, is determined via surveys with purchasing managers in the country’s manufacturing sector.

The index is now sitting just under 50, which marks neutrality or balance in the sector.

Absa said that the increase in the headline PMI was driven by the business activity index, which jumped by nearly 12 points to 50, following an 11 points decline in July,

“Although the magnitude of the rise in business activity gives an impression of some strength here, at 50, the index is pointing to flat month-on-month manufacturing output growth in August,” Absa said.

The new sales orders index also grew from 43.4 in July to 45.7 in August; however, it remained below 50, which separates expansion from decline. This continued to show subdued demand for local manufactured goods.

In addition, the supplier delivery index – which is inverted to show an increase when delivery lead times are longer – grew from 59.0 in July to 61.9 in August to lift the overall headline PMI.

Although longer lead times were generally associated with stronger demand in pre-Covid, the further lengthening of delivery times in July was due to significant delays following several truck attacks on the N3 transport corridor that month.

In August, the week-long taxi strike in Cape Town resulted in major worker absenteeism in many sectors, further lengthening delivery times.

“Because the most likely reason for longer delivery times in August was a supply-side constraint as opposed to higher demand, the headline PMI was, at least to some degree, again kept afloat artificially,” Absa said.

In addition, there was a marginal rise in the PMI price index to 65.9, following a decline to 64.8 in July.

“With a substantial diesel price hike of more than R2.50/litre looming in early September, this indicator has some scope to rise further in the near term,” Absa said.

The PMI employment index also dropped from 47.4 in July to 42.8, which is not good news for the official employment statistics in the factory sector.

The table below shows the changes across the PMI subcategories over the last three months.

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