Factory owners end 2018 in upbeat mood
By Sunita Menon - Jan 9th, 14:03
Activity in the manufacturing sector reached its best level in 2018 in December, ending the year on a strong note.
The Absa purchasing managers index (PMI), which gauges activity in the manufacturing industry, rose from 49.5 in November to 50.7 points in December.
A score above 50 indicates expansion in the sector and December’s figures were driven by increases in three of the five subcomponents that track activity, demand and supplier performance.
The boost in demand saw the index climb above 50 for the first time since February. For the first time since July, respondents expect business conditions to improve in six months’ time.
Despite this, employment moved to its lowest level since 2014, while the inventories index fell below 50.
Manufacturing, which accounts for about 13% of GDP, had a strong start to the fourth quarter with growth of 3% in October.
However, employment subcomponent in the index has fallen to its lowest in three decades, with figures comparable to 1972, before the boom in the 1980s.
“Indeed, while the December survey results are encouraging, a sustained recovery in demand is required before a meaningful recovery in manufacturing output, investment and employment can take place,” Absa said in a statement.
Absa warned, however, that possible load-shedding from Eskom from mid-January could “depress the tentative signs of a recovery in the sector”.
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Technology makes end-to-end supply chain visibility and predictive analytics a reality
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Contraction in economy looms in the first quarter
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