South Africa Factory Sentiment Hits Seven-Month Low on War Fears

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Or sign-in if you have an account.dwrdwltkkmjzcrgc{7n7p4us_media_dl_1.png Absa Group Ltd., Bureau for Econ(Bloomberg) — A gauge measuring South African manufacturer sentiment slumped to the lowest level in seven months over concerns that escalating hostilities in the Middle East could impact demand. 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It fell to 46.8 in July from 47.3 a month earlier, the Johannesburg-based lender said in an emailed statement on Monday.The survey was conducted in July, when the conflict between the US and Iran reignited after a brief respite. The war expanded to new maritime chokepoints in the Red Sea, while traffic through the Strait of Hormuz, a key trade artery through which a fifth of global oil and liquefied natural gas shipments pass, has become increasingly constrained. Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe conflict has led to wild swings in the oil price. It is currently trading above $84 a barrel from about $72 a barrel at the start of last month.“The renewed escalation of tensions in the Middle East, together with higher oil prices following June’s lows, likely contributed to the deterioration in sentiment,” the lender said. “However, the sharp decline also suggests that manufacturers remain cautious about the durability of the recent improvement in activity.”The gauge tracking expected business conditions in six months’ time declined to 49.3 in July from 56.6 the previous month.New sales order rose to 44.1, from 40.6, reflecting improved demand locally, while business activity increased for a second straight month to 48.8 from 45.6, boosted by an uptick in production.“Domestic demand and production continued to recover, while easing cost pressures offered further relief,” Absa said. “However, subdued confidence, weak export demand and continued inventory drawdowns suggest manufacturers remain cautious about the sustainability of the recovery.”The purchasing price gauge moderated in July, suggesting that the worst of the oil price shock has passed, barring any further upsurge in global energy costs, though, input costs remain elevated relative to before the war, the lender said.“However, the increase in diesel prices later this week will put renewed pressure on costs,” it said. “If recent rand weakness is sustained, that would also put upward pressure on imported goods costs.”Sign up here for the daily Next Africa newsletter and subscribe to the Next Africa podcast on Apple, Spotify or anywhere you listen.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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