The post-election protests in Mozambique led to a reduction in production at South African factories, causing a three-month consecutive drop in January. The losses are expected to be felt by the end of the year.

The Absa Group Ltd. purchasing managers' index, compiled by the Bureau for Economic Research, fell to 45.3 from 46.2 in December, the Johannesburg-based lender said on Monday in an emailed statement. It was the lowest reading since August.

"Respondents flagged a number of problems that were hurting production and demand, including trade disruptions with Mozambique due to political turmoil and fuel shortages affecting air freight," Absa said.

"The upcoming closure of ArcelorMittal's long steel business in South Africa has been flagged as potentially impacting some producers over the next six to 12 months," wrote Bloomberg.

The PMI reading was below 50 for the third consecutive month, signaling a contraction, reflecting a loss of strength in the country's industry after a recovery last year.

The decline was mostly caused by a sharp drop in the indicator measuring supplier deliveries, which fell from 56 to 49.9, while the employment index fell from 46.5 to 44.4.

An indicator of expected business conditions in six months fell from 67.6 to 64.9, Absa said.

"Uncertainties about global trade dynamics may have contributed to the drop," the lender said. (Bloomberg)