SA PMI stabilising at lows (December 2008)

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By Mokgatla Madisha

December’s survey results suggest a stabilisation of the deterioration in manufacturing business activity. The seasonally adjusted Investec PMI came in just above 40 index points, at 40.1 – only marginally higher than the record low of 39.5 posted in November.

Both the seasonally adjusted indicators for output and new sales orders increased slightly, but remain at very low levels. Employment conditions continued to worsen, with the seasonally adjusted employment index reaching 44.7. The pressure on input costs eased notably. The PMI price index declined by 12.8 index points to 71.8, as the global economic recession pushes international commodity prices downward.

Although it is reassuring that the index stabilised at this low level instead of dropping further, as was the case with most international PMI figures during December, the outlook for the manufacturing sector remains uncertain. Purchasing managers’ own expectations regarding business conditions in 6 months’ time recovered somewhat after the sharp downward adjustment in November, but on the whole, remain negative.


Source: Mokgatla Madisha, Investec Asset Management, January 16, 2009.


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