The Steel and Engineering Industries Federation of Southern Africa (Seifsa) is encouraged by the improvement in the Absa Purchasing Managers Index (PMI) for April, released on Wednesday, with the data showing that businesses are slowly responding to buoyant consumer, business and investor confidence.
Seifsa chief economist Michael Ade said in a statement that, following President Cyril Ramaphosa’s election in December, domestic economic data was expected to catch up with growing domestic sentiments resulting from the African National Congress’ elective conference.
However, Ade cautioned that, in addition to positive consumer and business confidence, there was a need for an equal uptick in demand and supply side dynamics.
“Seifsa is, therefore, encouraged by the improvement in the latest PMI numbers, which had previously dipped below the 50-point neutral level, which separates expansion from contraction, in February,” he said.
The latest seasonally adjusted preliminary PMI data show that the composite PMI improved to 50.9 in April, from 46.9 in March.
However, the headline PMI data still exhibits a lot of uncertainty and the volatility is driven by volatile input prices, owing to factors affecting supply, including the variable exchange rate, Seifsa stated.
“Enhanced volatility is also evident in the oscillating performance of the business activity, inventory levels and new sales orders subindices of the composite PMI index, which have been largely unpredictable.
“Given that the PMI is the first data for the month, the updated information provides a good preview and insight into the level of economic activity to be undertaken by production and procurement managers, including other key stakeholders of businesses in the month,” Ade said.