SA PMI surpassing previous record low

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By Mokgatla Madisha, Investec Asset Management.

The seasonally adjusted Investec PMI came in at 36 index points in March, surpassing the previous record low of 39.2 reached in February 2009.

The decline in output volumes accelerated in March, with the backlog of sales orders index reaching a record low 21.1 points. Slowing business activity continues to apply pressure on the labour market with the seasonally adjusted employment index falling to 39.2, the lowest level seen since 2000. Input cost pressures remain elevated, with the price index declining only slightly from 60.9 to 60, while inventories continue to decline.

Both the seasonally adjusted new sales orders and purchasing commitments indices showed slight increases to 32.6 and 34.3 respectively. Despite the poor current state of the sector, purchasing managers have raised their expectations of business conditions over the medium term. The business conditions index has increased from 38.3 to 46.6 over the month which may suggest a trough at current levels.


Source: Mokgatla Madisha, Investec Asset Management, March 2, 2009.


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