Magnitude of February PMI decline unexpected

| 0 Comments

 

AbdulDavids.jpgActivity in the manufacturing sector contracted in February for the first time in four months as business activity plummeted, signalling a sector "taking strain", said Abdul Davids, head of research at Kagiso Asset Management.

 
The Kagiso purchasing managers index (PMI), which gauges activity in manufacturing, fell by a steeper than expected 6.6 index points to 47.6 in February. A below-50 reading suggests contraction in activity.


A 16.2-point decline in the Business Activity Index (to 45.5) was the main driver of the fall in the headline index. January’s figure was artificially high owed to seasonal factors and a decline was expected in February, albeit not of the magnitude that was recorded, noted Davids.


He said the Business Activity Index has been very volatile since October 2014 - swinging by an average of 10.8 points from month-to-month – which reflects the uncertainty and volatility of the underlying environment as the timing and frequency of load-shedding is unstable.


Load-shedding would remain "a key constraint" in the manufacturing sector as interruptions in electricity supply affected manufacturing’s ability to produce and directly dampened domestic demand, said Davids.


Eskom implemented load-shedding on some days in February as electricity demand surpassed supply. The problem was made worse by technical glitches at some of the utility’s power stations.


The New Sales Orders Index also fell by 4.4 points to 49.3. The decline was likely driven by domestic
factors as the global manufacturing picture improved during February, said Davids.


The Employment Index slumped even further and is now at 43 index points.


The Inventories Index declined from its “exceptionally high level” in January, but at 53.3 it remains in positive territory.


The Price Index continued to signal a slowdown in the rate of increases in input costs. The index measured 60.4 points, which is more than 30 points below the level recorded a year ago. Davids cautions that the Price Index (and actual producer price inflation) could bounce back in coming months.


The fuel price increase in March will be matched by a further increase in April on the back of the strength of the US Dollar, higher SA fuel levy and the increase in the contribution to the Road Accident Fund. Electricity prices will rise in the coming months, which suggests that input cost pressures could intensify for manufacturers going forward.


Despite the decline, purchasing managers remain optimistic about the future as the index measuring expected business conditions in 6 months’ time fell only 2.5 index points to 64.4.


The PMI leading indicator remained below 1, which suggests that a quick output recovery is unlikely.


Download the full report here.

 

Leave a comment


SmartProcurement Newsletter
X

Please enter your details below to receive the SmartProcurement Newsletter for FREE on a regular basis.

As part of the SmartProcurement Newsletter you will be receiving World Class Procurement News, Tools, Tips, Tactics, Procurement Training updates, Upcoming Events, and the latest Procurement Career Openings.

* Email Address:
* Title:
* First Name:
* Surname:
* Company:
  Position:
* Country:
* Public / Private:

 

 

Career opportunites

Warehouse Manager

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
R400 000 - R480 000 CTC per annum.Location: ...More

Supply Chain Analyst

  • <500 000 Analyst Permanent Supply Chain Western Cape
R400 000 - R500 000 per annum.Location: Cape ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Consultant
R650 000 - R750 000 per annumLocation: Cape ...More

Logistics Manager

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
Salary: R 800 000 - R 900 000 ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Salary: R 600 000 - R 650 000 ...More

Supply Chain Analyst

  • <500 000 Analyst Gauteng Permanent Supply Chain
R600 000 - R700 000 per annum Location: ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Management
R850 000 - R1 000 000 per annumLocation: ...More

Commodity Manager

  • <500 000 Commodities Permanent Procurement Management Western Cape
R700 000 - R850 000 per annum,Location: Western ...More

National Supply Chain Manager

  • <500 000 Across borders Permanent Procurement Management Supply Chain
R750 000 - R1 000 000 per annum,Location: ...More

Industrial Engineer

  • <500 000 >500 000 Industrial Engineer Operations, Planning & Inventory Permanent Western Cape
R450 000- R500 000 CTC per annum,Location: Western ...More

Commodity Manager

  • <500 000 Commodities Gauteng Permanent Procurement Management
Category: Procurement,Salary: R700 000 - R800 000 per ...More

Supply Chain Manager

  • <500 000 Gauteng Permanent Procurement Management Supply Chain
Category: Consulting,Salary: R750 000 - R800 000 CTC ...More

Logistics Manager

  • <500 000 Across borders Logistics & Warehousing Permanent Procurement Management
Category: Logistics,Salary: R900 000 - R1 000 000 ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Area of Specialisation: Planning,Salary: R500 000 - R650 ...More

Industrial Engineer

  • <500 000 Analyst Gauteng Industrial Engineer Permanent
R800 000 - R850 000 CTC per annum.Location: ...More

Security Manager

  • <500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
(Total Cost to Company R350K - R550K).This is ...More

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R650k - R750k) excluding

Commodity Manager Raw Materials

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
(Total Cost to Company R980k - R800k) excluding ...More

Commodity Manager Logistics

  • <500 000 Commodities Gauteng Logistics & Warehousing Permanent
(Total Cost to Company R1mil - R900k).Industry: Engineering

Procurement Consultant

  • <500 000 Gauteng Permanent Procurement Consultant Procurement Management
(Total Cost To Company 550K - 450K) includes ...More