Manufacturing PMI rises for the first time in seven months

02 Aug 2019

ipadThe Absa manufacturing purchasing managers’ index (PMI) registered its highest reading since June 2016 last month, while activity in the sector was boosted for the first time in seven months, reports.  

The PMI rose from 52.1 points in July to 46.2 points in June, which was mainly driven by new sales orders and business activity.

Lisette IJssel de Schepper, an economist at Bureau for Economic Research, revealed that four of the five key subcomponents were recorded above the neutral 50-point mark, indicating that activity had expanded.

De Schepper said: “However, given growing concerns about the health of the global manufacturing sector, it remains to be seen whether this improvement can be sustained going forward. Indeed, while purchasing managers continue to expect conditions to improve in six months’ time, they are less optimistic than before.”

This result contrasts with what was seen in the first quarter, when the manufacturing output was one of the most negative contributors to the 3.2% GDP.

However, Investec economist Kamilla Kaplan said: “The last global manufacturing PMI for June confirmed that global new export orders fell at the fastest rate in six years. Against this backdrop, South Africa’s manufacturing sector can be expected to continue suffering from weak momentum.”

Meanwhile, the employment index increased from the decline seen in June, to 43.1 index points in July.

Additionally, the purchasing commitments index also rose by 6.3 points from June to 44.1 points.

The Steel and Engineering Industries Federation of Southern Africa's Marique Kruger emphasised on the importance of a continues PMI rebound, so as to enhance business confidence and expectations in the medium to long term.