Bad news for South African manufacturing – but there’s hope

South African manufacturers’ sentiment dipped in March, but a significant shift in a subset gauging deliveries signalled that the country’s snarled logistics might be starting to improve.

The overall Purchasing Managers’ Index retreated back into contraction territory of 49.2 from 51.7 in February as business activity and new sales orders were hit by weaker demand, Absa said on Tuesday.

Analysts surveyed by Bloomberg had expected the index to edge down to 51.3.

However, the expected business conditions in six months rose to 62.1 from 59.5 in February. It was likely boosted by the supplier deliveries index, which declined to a nine-month low of 54.1 from 62 points.

The index is inverted, so faster deliveries result in a decline, which “during times of uncongested and unconstrained supply chains are generally seen as a negative for the sector as it means suppliers are less busy,” Absa said.

Logistical challenges at state-owned Transnet have impacted deliveries to manufacturers and exports and weighed on economic growth.

The number of ships waiting to berth at the Port of Durban, which handles the largest volume of sea-going traffic of any port in southern Africa, stood at more than 60 vessels in mid-November before being reduced to just 12 by the end of January.