(Bloomberg) -- Sentiment among South African manufacturers snapped back to contractionary territory in November as weak domestic demand weighed on the industry and Donald Trump’s victory in last month’s US election muddied the global political outlook.
Absa Group Ltd.’s purchasing managers’ index, compiled by the Bureau for Economic Research, fell to 48.1 from 52.6 in October, the Johannesburg-based lender said Monday in an emailed statement. Two economists surveyed by Bloomberg had predicted a drop, though they both expected the gauge to remain in expansionary territory above 50.
“Despite more certainty on the local political front relative to the first half of the year, the global political outlook has become more complicated with concerns about global growth and trade dynamics following the election of Donald Trump as US president,” Absa said.
Sentiment eased even after South Africa’s state power utility stabilized electricity supply, the inflation rate fell below the mid-point of the central bank’s 3% to 6% target band, and a reduction in interest rates raised expectations of increased consumer spending.
While the decline in the sentiment index marks a loss of momentum in the recovery seen in recent months, conditions are “not as bad as a year earlier,” Absa said.
The business activity sub-index saw a sharp drop to 49 from 55.6 in the prior month, while new sales orders fell to 45.9 from a previous 54.8. The six-months expected business conditions index remained steady at 62.3, indicating that factories expect business conditions to remain supportive, the lender said.
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