PMI rises to 49.5 in Sept
Although the Barclays Purchasing Managers’ Index (PMI) rose by 3.2 points to 49.5 in September, it averaged 49.4 in the third quarter, compared with the average of 53.5 in the second quarter.
“While the headline index failed to climb back above its neutral level of 50 in September, it was encouraging to see that four of the five main PMI subindices registered improvements,” commented BNP Paribas Securities South Africa economist Jeffrey Schultz.
The business activity subindices increased to 51.4 in September, compared with 44.8 in August, while new sales orders rose to 47.7, compared with 42.5 in August.
Manufacturer’s inventory levels also improved to 48.4, from 45.2 in August, along with supplier performance increasing from 51.2 to 51.6 in September.
The employment index, however, slipped to 48.7, from 50.6 previously.
Barclays pointed out that the index tracking expected business conditions in six months’ time had increased to 63.8 in September, putting the subindex at its highest level since early 2015.
“The more upbeat sentiment could be driven by less pressure on costs,” said Barclays, noting that the price subindex had decreased to its lowest level in nearly six years, to 59.7.
The Steel and Engineering Industries Federation of Southern Africa (Seifsa) welcomed the PMI result for September, but warned that the latest data presented a “confusing picture of the state of things in the metals and engineering sector”.
Seifsa chief economist Henk Langenhoven said the latest PMI data presented conflicting signals that made it difficult to interpret.
The business activity subindex had increased nearly 15% month-on-month, but was 10% lower in the third quarter than the second quarter, for instance.
“The signals emanating from the PMI in September do not give confidence that the improvements observed are based on solid foundations,” he said.
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