Improvement in the latest Absa Purchasing Managers’ Index (PMI) bodes well for the future of South Africa’s manufacturing sector according to the Steel and Engineering Industries Federation of Southern Africa (Seifsa).
The PMI rose from 47.9% in June this year to 51.5% in July, placing the data above the neutral level of 50 and providing some relief following two consecutive decreases in May and June 2018.
Seifsa economist, Marique Kruger, said that improvement in the index was expected to have a positive knock-on effect on output levels in the manufacturing sector but continued to reflect the burden of fluctuating input costs, such as fuel and energy, borne by manufacturers which were largely underpinned by a weaker rand.
She noted that improvement in the employment sub-index of the PMI, from 46% in June to 50.8% in July, was particularly encouraging for an eventual improvement in the unemployment rate – especially following the 105 000 job losses recorded by Statistics South Africa for the manufacturing sector in the second quarter of 2018.
