Advertise with

The poor PMI for September indicates that production in the manufacturing sector will be subdued.
The poor PMI for September indicates that production in the manufacturing sector will be subdued.

Bleak manufacturing outlook as PMI keeps falling


By Sunita Menon - Oct 2nd 2018, 10:23

The poor PMI for September indicates that production in the manufacturing sector will be subdued. 

The outlook for the manufacturing sector in the third quarter looks bleak.

The seasonally adjusted Absa purchasing managers index (PMI), which gauges activity in the manufacturing sector, hovered at a very weak 43.2 points in September from 43.4 the month before.

The average level of the PMI in the third quarter was 46 index points, which is the lowest average since the third quarter of 2017.

“The latest figure dashed any hope that the sharp PMI decline in August was a once-off occurrence,” Absa said in a statement.

A figure below 50 indicates contraction in the sector. The PMI is usually a good indicator of where the production numbers will head in two months.

“While high-frequency activity data from Statistics SA suggests that the economy will exit the technical recession in the third quarter, the PMI survey inspires little hope that the economy staged a strong recovery,” said Absa.

The PMI dropped slightly with declines in three of the five subcomponents of the headline index. Only the suppliers’ deliveries index came in above the neutral 50-point mark.

Business activity index rose 1.5 points in September but remained well below the neutral 50-point mark at 38.7, while new sales orders index fell even lower during September to 39.6. The employment index fell to 42, its lowest level in more than four years.

After six consecutive monthly declines, the index — which tracks expected business conditions in six months’ time — moved slightly higher in September, rising to 45.8 from 44.6.

In September, the PMI showed that activity in the manufacturing sector had dipped to its lowest level in just more than a year.

“The sector still faces many headwinds, including an increased tax burden and higher fuel prices that keep a lid on already mediocre domestic demand, while ongoing policy uncertainties are keeping investment spending hostage,” NKC African Economics economist Elize Kruger said.
Business Live 

Read more about: trade | sa economy | pmi | manufacturing | business

Related News

Load shedding threatens jobs, economic recovery, says consumer body
22/03/2019 - 13:31
Load shedding, which has been escalated to Stage 4, is posing a significant risk to economic recovery, the Consumer Goods Council of South Africa said in a statement, as rotational blackouts continued to grip the country.

Retail sales recover in January after dismal December figures
22/03/2019 - 09:23
Retail spending showed signs of recovery in January, growing 1.2% on an annualised basis, slightly faster than analysts had expected.

SA beef export market reopens to the Middle East
22/03/2019 - 08:23
The recently held Gulfood Trade Show 2019, which took place at the Dubai World Trade Centre, saw the reopening of beef trade between South Africa and the Middle East.

4 Digital transformation communication strategies
20/03/2019 - 09:59
If you’re running a business in 2019, digital transformation should be on your mind. It doesn’t matter whether you’re a one-man band decorating cakes at home, or stand at the head of a multi-national corporation with hundreds of employees – it affects you. From how you engage with your customers, issue invoices, to how staff apply for leave or even claim expenses. The key issue for big organisations is without employee buy-in, you will struggle to reap the rewards. Effective communication is the key.

Tips for small business owners to survive load-shedding
20/03/2019 - 09:36
With small businesses already dealing with hikes in VAT and petrol, coupled with decreased consumer spending, load-shedding is a bridge too far, particularly for restaurateurs.