SA Purchasing Managers Index declines further
By Mokgatla Madisha
The seasonally adjusted Investec PMI declined to 46.2 from a revised 47.7 in September, with slowing demand and a reacceleration of input costs weighing down on the manufacturing sector.
With a slowdown in domestic demand and increasing evidence of further moderation in growth by the most important trading partners, the sector is set for further declines. Global financial market uncertainty intensified during October, putting upward pressure on emerging market currencies like the rand. While commodity prices continue to decline, the impact of domestic currency weakness on imported inputs saw the PMI price index jump to 85.7.
Purchasing managers are adopting a more defensive stance by lowering inventory levels, while further reducing purchasing commitments. Any recovery of the manufacturing sector is likely to be postponed due to the severity of the slowdown of the global economy, with managers adjusting their near term expectations regarding business conditions down sharply.
Source: Mokgatla Madisha, Investec Asset Management, November 3, 2008.
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