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14 October 2011 | Angeline Albert
The next two months of purchasing
managers' indexes (PMIs) will be “crucial” in indicating whether countries are
likely to move towards or away from a double-dip recession, the managing
director of CIPS Southern Africa believes.
Having stressed the importance
of PMIs in a speech to purchasers attending Smart Procurement World (11-13 October) in South Africa, André Coetzee told SM: “The Kagiso PMI precedes
the actual manufacturing production numbers in South Africa by six weeks. It’s
the first indication of any change in the sector and a recession starts and
ends in the manufacturing sector. The PMIs in the West are hovering around 50.
If they start to recover and move significantly above this figure the chance of
a double-dip recession for them and South Africa reduces.
He said he is keeping a watchful eye on
the PMIs of the UK, China, US and the Eurozone.
The seasonally adjusted Kagiso PMI for
the month of September gained four points to move back above the key 50-index
point mark to reach 50.7. This came as the Eurozone PMI declined further below 50
to 48 in September.
US and Chinese manufacturing
growth is also slowing, which raises Coetzee’s concern about the sustainability
of the SA PMI recovery.
South Africa’s domestic factory
sector was hit hard by strikes during July and August and any recovery in
September is seen as a move back to a more normal situation in the absence of
industrial action. The considerable weakening of the South African rand also
made the country’s manufacturers more competitive and led to a rise in business
As reported on supplymanagement.com CIPS CEO David Noble said interest in PMIs was one indication of just how
procurement was influencing mainstream debate. He said the recent UK
manufacturing PMI drove a “huge and significant shift” in the FX exchange. A
huge jump in the pound when compared to the dollar occurred because the
manufacturing PMI was much better than expected. “In tracking the accuracy
of PMIs to the GDP data there’s a very, very close collaboration.”