Marginal growth in South Africa PMI

1 December 2011

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1 December 2011 | Angeline Albert

South Africa’s Kagiso PMI showed marginal growth in November, with activity rising by 1.1 index points to 51.6.

The figure, released today, is however below the 54.2 reached before July’s factory strikes.

November showed the fourth consecutive month of gains, indicating manufacturing will contribute to GDP growth in the last quarter. Employment levels showed some improvement but at 46.5 remained below the crucial 50 mark that separates growth from contraction.

The new sales orders and inventory index indicated purchasing managers expected demand to be stronger than it turned out to be, with buyers purchasing inputs in anticipation of increased demand, which did not materialise. This was reflected by

November’s new sales orders index which eased marginally by 0.4 points to 51.2, while the inventory index rose by 3.3 index points to reach 54.4.

South Africa’s November PMI goes against the trend for its major trading partners. The Markit Eurozone flash PMI estimate for November came in at only 46.4, a weaker performance than the 47.1 recorded during October and the HSBC Chinese flash PMI fell to a 32-month low of 48. These weak global PMI results question the sustainability of South Africa’s domestic PMI recovery. The uncertain outlook is reflected in the expected business conditions index, which declined by 7.4 points to 55 – the lowest level since August 2011.  

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