CAPE TOWN: Manufacturing activity stagnated last month but was in growth territory which, according to economists, suggested the sector would contribute only modestly to economic growth and job creation. The Barclays purchasing managers’ index (PMI), compiled by the Bureau for Economic Research (BER), remained unchanged at 51.4 points last month. The latest report was released on Monday.
A reading above 50 suggests expansion in manufacturing activity. The PMI has been stuck at levels of about 50 over the past few months, suggesting weak growth in manufacturing production, said MMI economist Sanisha Packirisamy. “There are head winds facing the sector including weak global and domestic demand, and supply-side constraints (power cuts).”
The PMI stood at 54.2 in January but fell to 47.6 in February. It remained below 50 until May when it reached 50.8, improving to 51.4 in June and last month. While the latter figure was “not great”, it was still a positive signal, given that the manufacturing sector had to contend with severe electricity shortages during the month, Barclays economists Miyelani Maluleke and Peter Worthington said.
Although business activity improved, new sales orders declined – which is in line with weak demand and low consumer confidence levels. The business activity subindex rose 1.5 index points to 53.2, its best level since January. The new sales orders subindex fell to 49.8.
