Kagiso PMI dropped by 1.4 index points in March

Kagiso PMI dropped by 1.4 index points in March

Photo by Duane Daws

1st April 2014

By: Leandi Kolver

Creamer Media Deputy Editor


Font size: - +

The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) dropped by 1.4 index points to 50.3 in March, mainly driven by a decline in the new sales orders index, which dropped to its lowest level since 2006.

The new sales orders index fell by 6.8 points to 46.6, owing to weaker domestic demand, Kagiso Asset Management head of research Abdul Davids said.

“The demand weakness may have been exacerbated by the prolonged production stoppages in the platinum mining sector, which halted the need for supplies from specific manufacturing subsectors,” he explained.

Davids further pointed out that the decline in the March PMI brought the average for the first quarter of the year to 50.6, suggesting that the manufacturing sector was struggling to gain real momentum.

Banking group Investec said this suggested that the performance of actual manufacturing production would be weaker and consequently the contribution to the country’s gross domestic product, in the same quarter, would be smaller than that of the fourth quarter of 2013.

Meanwhile, BNP Paribas Cadiz Securities economist Jeffrey Schultz said the PMI leading indicator “suggested little in the way of a meaningful growth recovery in this side of the economy over the coming months”.

Davids said the South African manufacturing PMI also remained firmly below levels recorded in developed economies. “In the US, the preliminary manufacturing PMI nudged down to 55.5 in March from a 45-month high of 57.1 in February, while the
eurozone’s flash manufacturing PMI came in at 53, slightly down from 53.2 in February.”

However, he pointed out that China’s manufacturing PMI, which fell to an eight-month low of 48.1 points in March, was underperforming even South Africa.

Meanwhile, the business activity index returned to a level above the 50-point mark, after lingering below for three months running, which suggested a moderate acceleration in output. The index rose to 51 points from 48.8 in February.

Further, the price index eased marginally to 93 points from February’s record high of 95.1.

“The index remained exceptionally high and suggests considerable pressure on input costs, likely driven by the rand exchange rate that remains substantially weaker than 12 months ago,” Davids stated.

Investec said inflationary pressures remained a feature in the latest survey findings.

“Prices continued to rise rapidly, likely linked by manufacturers to higher prices of imported raw material and intermediate goods, resulting from rand weakness,” the bank said, adding that there was scope for these price pressures to further abate in the coming months, "given the retrace in the rand during the first quarter of 2014".

Moreover, commodity prices were expected to stabilise in view of the moderate nature of the global recovery, Investec said.

The employment index increased by 2.6 points to 51.8, while the inventories index returned to January’s level of 53.7, down from 59.6 in February.

Meanwhile, the index measuring expected business conditions in six months’ time fell to its lowest level since September last year; however, Davids noted that, at 54.5 index points, “manufacturers are less optimistic but still expect conditions to improve over the next few months”.

Edited by Tracy Hancock
Creamer Media Contributing Editor




Our Easy Access Chute concept was developed to reduce the risks related to liner maintenance. Currently, replacing wear liners require that...

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...


Latest Multimedia

sponsored by

Magazine image
Magazine round up | 12 July 2024
12th July 2024

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
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?







sq:0.377 0.432s - 174pq - 2rq
Subscribe Now