SA PMI at 13-month high, but prices and jobs blunt optimism

6 April 2011

6 April 2011 | Paul Snell

Manufacturing activity in South Africa rose to its highest level in more than a year in March, according to the latest Purchasing Managers’ Index.

However, a fall in the job market and dramatic price inflation tempered the positive news for buyers.

The composite index, published by Kagiso, recorded its highest figure in 13 months, expanding to 57.2 in March. This compared to 54.8 in February. Business activity accelerated significantly to 59.7, with the boost in production attributed to increased demand. This was backed by growth in new sales orders - 62 compared to 59 two months previously.

But not all the figures for the sector were positive. Employment – which finally broke through the no-change mark of 50 indicating expansion in February – shrank again, with the figure of 46.9, the lowest since December. Input prices too hit their highest level since 2008 to reach 88. This means prices have risen by 32 points in the past five months.

The contrasting outlook also dampened buyer optimism for the future. Although the ‘expected business conditions’ index continued to grow, it was the second consecutive occasion it had done so at a slower rate than the previous month. The figure for March was 58.1.

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