Manufacturing ends year with a PMI low

12th January 2018 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

Manufacturing ends year with a PMI low

Photo by: Duane Daws

December’s “dismal” Absa Purchasing Managers’ Index (PMI) performance indicates that the South African manufacturing sector ended the year on “the back foot”, the monthly Bureau for Economic Research survey suggests.

After four consecutive months of improvements and reaching a six-month high in November, the seasonally adjusted PMI revealed a deepening contraction in manufacturing sector activity, declining to 44.9 points in December from 48.6 points in November.

The deterioration was broad-based as all five subcomponents of the index declined, with the business activity index registering the greatest fall from 48 in November to 42.7 in December.

“In December, survey respondents reported a weakening in demand conditions, as evidenced in the drop in the new sales orders sub index. This, in turn, will have driven the decline in output, purchasing activity and employment,” Investec commented in response to the PMI’s release.

However, despite the weakening in activity in December, survey respondents reported being more optimistic with respect to future business conditions.

“This could suggest that the manufacturing sector is expected to improve its performance in 2018,” Investec noted.