Financial services firm Absa’s Purchasing Managers’ Index (PMI) declined from 50.8 in May to 47.3 index points in June.
The sharp decline in the PMI’s purchasing price index by 13.5 points to 71.3 in June suggests that April and May may have marked the peak of price pressures, particularly given the fuel price reductions that came into effect on July 1, the bank says.
The survey for the monthly PMI took place after the US and Iran signed a memorandum of understanding to end hostilities in the Middle East and reopen the Strait of Hormuz, which led to a significant decline in the Brent crude oil price.
With the 3.5-point month-on-month decline, the PMI was below the neutral 50-point mark, after having been in expansionary territory during April and May.
The decline reflects softer demand conditions across the manufacturing sector, although easing geopolitical tensions helped ease input cost pressures and improve manufacturers' expectations for the months ahead.
