SA PMI indicates sustained growth, but jobless recovery

6 May 2011

6 May 2011 | Angeline Albert

The Kagiso Purchasing Managers’ Index (PMI) for South Africa continued to expand in April, but provided evidence of a “jobless recovery” for manufacturing.

At 56.4 index points in April, the PMI was only marginally lower than the 13-month peak of 57.2 achieved in March. Although the business activity and new sales orders indices were slightly weaker than last month’s scores - at 58.4 and 61.1 respectively - their levels suggest robust manufacturing production and strong demand for factory goods.

However, improved business activity and new sales orders are not resulting in the increased hiring of workers, with the PMI employment index rising by 2.1 points to 49 index points, but remaining below the 50-mark that separates job reduction from growth.  

Apart from in February 2011, the PMI employment index has remained below 50 since May 2010.

André Coetzee, managing director of CIPS Southern Africa, said: “If you look at the international environment people are talking about a jobless recovery. In South Africa, when you consider manufacturing, we are seeing this.

“The worrying factor is recovery has not improved employment. Business activity and manufacturing is up, but this is being achieved with less workers. We cannot talk about a sustained recovery unless we see that job recovery. If we are not creating jobs, this will have a negative impact on the economy.”

In April, input cost pressure eased somewhat from March’s figure of 88 to 82.9 but the PMI price index still indicated fast-rising producer prices. Coetzee added: “The employment issue plus the volatility of commodity prices is quite concerning.”

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