SA Purchasing Managers Index Hits Headwind

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By Andre Roux

June witnessed a 5.3 index point decline in the seasonally adjusted Investec PMI to 43.8 from 49.1 in May, indicative of continued pressure on the manufacturing sector.

The seasonally adjusted business activity index dropped to 38.7 (lower than readings posted in 2003 when the sector was in a recession) pointing towards a sizeable contraction in factory output. The decline in new sales orders accelerated during the month. Pressure on input prices persisted, with the PMI price index printing at 90.8 (marking it the fourth consecutive print above the 90 point reading). The employment sub category printed below the critical 50 point level for the second consecutive month.

The combination of slowing demand and continued price pressures on input costs provide significant headwinds to the sector over the medium term.

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Source: Investec Asset Management, July 1, 2008.

 

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