Photo by: Duane Daws
The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) fell to 45.4 index points in April from 47.9 points in March, dragged down by a four-point decline in the business activity index to 40.6 – its lowest level since July 2011.
Kagiso Asset Management research head Abdul Davids described April as a “tough month” for manufacturers, owing to the intensity of electricity load-shedding and, to a lesser extent, the large number of public holidays.
“This not only directly hampered output, but also weighed on domestic demand and likely contributed to the 6.7-point drop in the new sales orders index, which is currently at its lowest level since August 2009.
“While the manufacturing sector seems set to contract on a quarterly basis in the first quarter of 2015 – barring a remarkably strong performance in March – the April PMI suggests that a quick recovery is unlikely. In fact, conditions could worsen further in the second quarter,” he cautioned.
The Eurozone manufacturing PMI dipped only slightly in April from an 11-month high in March, while, in the US, the Institute for Supply Management Manufacturing Index remained above 50, despite recently trending lower.
Davids said this further underlined the fact that domestic demand, rather than global developments, was holding back sales orders.
Meanwhile, in line with the weak output picture, the employment index ticked lower to 45.2 points from 46.9 points in March, confirming the subdued trend in employment conditions.
“As expected, the increase in the domestic fuel price, owing to a rise in the international crude oil price and a substantial hike in fuel levies, contributed to a further acceleration of input price pressures. The price index rose to 69 points from 67.9 points in March,” he outlined.
Looking ahead, the index measuring expected business conditions in six months’ time declined for a third month in a row to 56.3 points in April, while the PMI leading indicator also deteriorated sharply, falling to its worst level since the middle of last year as inventories significantly outstripped new sales orders.