Business pessimism continues after August PMI release

There appears to be renewed pessimism in the economy if the August 2015 Barclays Purchasing Managers’ Index (PMI) reading is anything to go by, the Steel and Engineering Industries Federation of Southern Africa (Seifsa) said.

The seasonally adjusted overall index declined by nearly 5% in August compared to July 2015. Speaking after the release of the index Seifsa chief economist, Henk Langenhoven, said that the ‘business activity’ sub-index had shown higher volatility again.

“The August 2015 level is 8.6% lower than July, and although this is 7% better than August 2014 (one month after the strikes had ended), it is still nearly 13% lower than August 2013. The distortive effects of the instability during 2014 are still obvious,” Langenhoven said.

Of concern, however, is the fact that both the overall index and the business activity sub index shows that confidence in August this year was lower than July:
• The overall PMI declined by 5%
• Expected business conditions for the next 12 months declined by 17%
• Business activity is lower by 9%
• Suppliers’ performance is lower by 5%
• The employment indicator is down by 3.6%.

“Future data releases will tell us whether a lower turning point has been reached or more pain is in store for the sector,” Langenhoven concluded.