. . . but Seifsa warns that corner not yet turned
The Steel and Engineering Industries Federation of Southern Africa (Seifsa) has welcomed the slight growth registered in the Purchasing Managers Index (PMI) data for November, notwithstanding the fact that neither the overall nor the activity subindex could break through the neutral 50-point level, indicating a sustained contraction.
Seifsa senior economist Tafadzwa Chibanguza said the increase in the overall PMI between October and November reversed the losses recorded in the previous reading and only slightly relieved the pressure in the long-running trend.
“At 48.3 index points, however, the seasonally adjusted PMI for November is still below the neutral 50 index points. “This maintains it in the contraction space. “More importantly, at 49.02 points, the 12-month average is also shy of the 50 index points, and this shows a sustained contraction,” said Chibanguza.
Between October and November, prices increased by 10.3%, which is in line with Seifsa’s Composite Cost Index, which recorded an 11.5% increase over the similar period.
Significant to the metals and engineering sector is the business activity subindex of the PMI, which leads the metals and engineering sector by 12 to 14 months, Chibanguza said. The seasonally adjusted business activity index increased by 12.4% month-on-month.
However, this is still below the neutral 50 points – which represents contraction – in the 11 months to November, with the index contracting by 1.33%. Comparing statistics year-on-year, the index contracted by 2.07%.
“We have to keep in mind that the low point of an economic cycle is often characterised by volatility and the PMI is testament to that fact. “So, in looking at the monthly statistics, we should also consider the longer, dated statistics and place more emphasis on the latter,” he explained.
He added that the point often stressed was that the leading characteristics of the business activity subindex to the metals and engineering sector’s production performance was a statistical one. This means that each successive reading of the business activity subindex gives a better understanding of what to expect in the metals and engineering sector for at least a year ahead.
“Unfortunately, our conclusion from this latest reading of the PMI is that we have not turned the corner as yet, judging from the sustained trend in the PMI.
“With the production in the metals and engineering sector having contracted by 4.18% at our latest reading, it would take a lot more successive monthly increases to turn the trend around,” Chibanguza said.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation