South Africa’s purchasing managers’ index unexpectedly rose to its highest level in six years in August as a weaker rand makes manufactured-product exports more attractive, Kagiso Tiso Holdings said.
According to a Bloomberg report on Monday, the seasonally adjusted index climbed to 56.5 from 52.2 in July, Johannesburg-based Kagiso said in an e-mailed statement. The index has been above 50, an indication of expansion in factory output, for five months.
The median estimate of four economists surveyed by Bloomberg was for the index to drop to 51.5.
“We may be seeing the first signs of import replacement as the weaker rand improves the competitiveness of locally-manufactured goods, versus more expensive imported goods,” Kagiso said. “The sustained weakness in the currency has improved the global competitiveness of our exports of manufactured goods.”
The rand has dropped 17 per cent against the dollar this year, the worst performer among 16 major currencies tracked by Bloomberg and reached a four-year low of 10.5096 per dollar on August 28.
Some exporters are already benefiting from the weaker rand, Finance Minister Pravin Gordhan said in an interview on August 27.
The index measuring business activity rose 7.4 points to 59.2, Kagiso said. The new sales orders index climbed 2.5 points to 57.5, while the purchasing commitments index gained 11.6 points to 54.4, it said.
The Bureau for Economic Research, based at the University of Stellenbosch near Cape Town, conducts the PMI survey on behalf of Kagiso.
Meanwhile, when Wal-Mart Stores, the world’s top retailer, bought control of major South African discount chain Massmart Holdings in 2011, American shopping mall developer Irwin Barkan had an epiphany.
An industry veteran of 30 years, Barkan’s United States home market was “graying”, while the youthful, underdeveloped African continent offered a sweet spot, with a rapidly expanding middle class and no competition from online retailers.
“When Wal-Mart announced it was buying 51 per cent of Massmart, I knew that if I was going to stay in business, Africa was where I had to go,” he said.
He moved last year to Ghana, one of the continent’s brightest economic hopes, and his company, BG International, has broken ground on what will be an 18,400-square-metre (200,000 sq feet) enclosed mall in West Accra. Another mall planned for Ghana’s second city of Kumasi is at a similar stage.