JOHANNESBURG: The South Africa’s purchasing managers index (PMI), rose to 47.9 in March from 47.6 in February. A below-50 reading suggests activity is contracting. The rise in the PMI was mainly driven by an almost four index-point rise in the employment subindex.
Despite the improvement in the employment subindex, it remained well below the 50-point mark at 46.9 points, confirming that employment conditions in the sector remain subdued. Some manufacturers have indicated they are now using more machines rather than labour to avoid the damage labour strikes have on production.
The PMI average for the first quarter of 2015 was 49.9 index points – just below the neutral 50-point mark and 1.3 points lower than the 2014 fourth quarter average. This suggested that the rebound in actual manufacturing production growth recorded in the fourth quarter of last year was unlikely to be repeated in the first quarter of this year, Kagiso Asset Management head of research Abdul Davids said.
“Electricity load-shedding and general weak demand seems to have nipped the recovery in the bud and will continue to weigh on the manufacturing sector,” Mr Davids said. New sales orders and business activity subindices, which are the two largest subcomponents of the PMI, fell in March. New sales orders slipped to 49 points from 49.3 previously. The slower demand for sales orders in turn contributed to the business activity subindex falling to 44.6 index points in March from 45.5 previously.
