The seasonally adjusted Absa Purchasing Managers’ Index (PMI) edged lower to 47.1 index points in December, down from the 47.7 index points recorded in November.

The December figure is also about one point below the average recorded through 2019.

The PMI further paints a bleak picture of the performance of the manufacturing sector through the year as the headline PMI only managed to edge above 50 points for two months in the year.

Bouts of load-shedding and persistent weak domestic demand, coupled with more intense headwinds from the global economy, likely weighed on activity during the year. In December, two of the major subcomponents registered fairly large declines.

The new sales orders index slumped to record the lowest level seen in 2019. Part of this may stem from weaker external demand as respondents noted a drop in exports for a second consecutive month, Absa said on Wednesday, adding that, driven by the drop in demand, business activity also fell in December.

Activity was further hampered by the return of load-shedding during the month, with some respondents specifically flagging electricity disruptions as the reason for lost production time.

The risk of further load-shedding in January dampens expectations for a strong recovery in output at the start of this year.

Meanwhile, the declines recorded in December were, to some extent, countered by smaller improvements in three other subcomponents, namely employment, inventories and supplier deliveries.

However, of these three, only supplier deliveries came in above 50 points, with the others still indicating a worsening of conditions.

According to Absa, the index tracking expected business conditions in six months’ time declined again in December after a slight improvement in November. The index fell to 45.9 index points from 47.4 index points in November, which is in stark contrast to the start of 2019 when the index was at 67.2 points.

The return of load-shedding likely soured expectations in December, while some may be concerned that export demand could continue to falter in the first half of this year.

The purchasing price index, meanwhile, rose in December to reach 65.8 index points, up from the 63.3 index points recorded in the month before. Despite the increase, the index remains fairly low after sharp declines in October and November.

The index is still about five points below the average level recorded throughout 2019.

The business activity index fell further in December after a sharp drop was recorded in November, marking the index’s decline to the lowest level since April 2017.

Further, the employment index increased slightly to reach 43 index points in December. While this is somewhat higher than the level seen in recent months, the reading remains well below the neutral 50-point mark and points to continued job losses in the sector.

The inventories index rose for a second consecutive month to reach the best level since July. However, of concern is that inventories are well above new sales orders, which means that the PMI’s so-called leading indicator points to further weakness in activity at the start of the new year, Absa pointed out.

The supplier deliveries index recovered some of November’s loss and rose back to 56 points in December. The index has managed to remain above the neutral 50-point mark for four consecutive months.