Purchasing Managers’ Index Still Volatile Despite Rebound

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Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger.
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While the increase in overall business activity in the broader manufacturing sector – as reflected in the latest ABSA Purchasing Managers’ Index (PMI) data – is encouraging, nevertheless the trend remains volatile, highlighting the underlying constraints faced by business, Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger said recently.

Based on a survey of purchasing executives, the composite PMI data for June 2019 shows that industrial activity improved to 46.2 points, up from the 45.4 points recorded in May 2019. A reading above the benchmark level of 50 indicates an expansion when compared with the previous months, while the reverse is true for a reading below 50.

Speaking after the release of the data, Kruger said it is encouraging to note that the majority of the five seasonally-adjusted sub-components correspondingly registered increases in June 2019 when compared to May 2019. Of the five sub-components, the new sales orders and the inventories subindices increased the most, surging from 44.4 points in May 2019 to 46.2 points and from 41.6 points to 43.4 points respectively in June 2019, while the worst-performing sub-index was the employment sub-index (41.9 points).

Despite the improvement, Kruger said the PMI trend is still very volatile, highlighting the underlying constraints faced by business.

“Against the backdrop of low domestic demand, companies still have to deal with fluctuating input costs, increasing fuel and energy costs, carbon tax and volatility in the exchange rate. These are very challenging,” concluded Kruger.

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