Index shows increase in manufacturing output

The seasonally adjusted Kagiso Purchasing Managers’ Index (PMI) recovered from an 11-month low in April to reach 50.8 index points in May. The 5.4 index-point increase brought the index back above the neutral 50-point mark, albeit only slightly.

According to Lisette IJssel de Schepper, an economist at the Bureau for Economic Research, “the significant gains suggest that the factors that held back the manufacturing sector in April were alleviated somewhat in May”.

This included several long weekends due to public holidays in April. In addition, while load-shedding still weighed on the sector in May, it was mainly scheduled on weekends and the late afternoon on working days. This could have alleviated the constraint somewhat.

Furthermore, the sustained weak level of the rand exchange rate, as well as improving growth prospects in Europe, could have supported manufacturers targeting the export markets. Respondents indicated that rand weakness was starting to improve competitiveness on international markets.


Manufacturers noted an acceleration in input costs, with the price index increasing for a third consecutive month to 73.2 from 69 previously. The fuel price increase in June, as well the electricity price hike scheduled for July will keep upward pressure on costs going forward.

IJssel de Schepper concluded that “higher demand will have to be sustained going forward for manufacturing production to recover strongly from the contraction recorded in the first quarter of 2015”.