Manufacturing index slumps into contraction territory

14th July 2017 By: Natasha Odendaal - Creamer Media Senior Deputy Editor

The seasonally adjusted Absa Purchasing Managers Index (PMI) declined to 46.7 index points in June from 51.5 in May.

The deterioration was broad-based, with four of the five main subcomponents moving lower, compared with May, exacerbated by continued uncertainty about the outlook for the domestic economy.

“Several domestic data releases, such as the economy having entered a technical recession and business confidence plunging to recession-low levels, as well as continued uncertainty on the political front during the month, likely explain why respondents were notably more pessimistic about business conditions going forward,” the Bureau for Economic Research said in a statement.

The business activity index has been particularly volatile, slipping lower to 45.4 in June, from May’s 52.3.

The index tracking expected business conditions fell to 50 – its lowest level since February 2016 – from the 61.4 registered in May.

New sales orders also fell to 43.7 in June, reversing the gains in May to 54.1.

While the PMI reveals a subdued picture of conditions in the sector, the purchasing price index indicates that manufacturers at least reported a deceleration of upward cost pressures.

The price index declined by 7 points to 61.3 index points in June – the lowest since October 2016.

The employment index edged down marginally from 47.4 in May to 47.1 in June.