Strong rand hits manufacturers

ED RICHARDSON THE STRONG rand is knocking both exports and job creation, according to the January Investec Purchasing Managers Index (PMI), which dropped to 48.1 points from 52.5 points in December. “The decline to a level below 50 index points indicates a contraction in manufacturing sector activity, which appears to be at odds with strong overall domestic demand. However, it can probably be explained by the strength of the rand against the major currencies in recent months,” says Andre Roux of Investec Asset Management. As a result, jobs are being shed. The seasonally adjusted employment index declined from 48.7 points in December to 46.7 points in January. This indicates a continuation of labour shedding in the manufacturing sector, which is in sharp contrast to the current experience in the rest of the economy.