PMI declines for third consecutive month - tracks lower global factory sector

| 0 Comments
PMI decline July 2011.jpgThe seasonally adjusted Kagiso PMI declined for a third consecutive month in June, and at 53.9 index points reached the worst level so far in 2011. Although the level of the index suggests that the manufacturing sector is expanding, it also signals a moderation in the sector’s growth momentum. The recent trend for the SA PMI is in line with global factory sector developments, the kagiso website reports.

Both the current activity and forward looking indicators lost some momentum in June. The business activity and new sales orders indices lost ground, while purchasing managers were also less optimistic about future business conditions. New sales orders, the largest weighted PMI category, declined by 3 index points to a still robust 58 index points, whereas business activity gave up 1.6 points to 55.2.

The global PMI peaked at 57.4 in February 2011 and has since declined to 52.9 during May. Albeit with a couple of month’s lag, the SA manufacturing production cycle closely tracks international factory sector developments. Given that the recent loss of global momentum (driven by the impact of the previous strong rise in commodity prices such as oil and the Japanese disaster in March) will in all likelihood prove to be transitory, the declines for the SA PMI should also stabilize in the not too distant future. However, because of the lag between SA and global trends, the domestic PMI could see another month or two of declines before a re-acceleration takes hold.

The most concerning part of the SA manufacturing story remains the employment situation. The PMI employment index remained stuck below the key level of 50 index points in June and declined slightly (by 1 index point) to 47.7. With the exception of February 2011, the PMI employment index has been below 50 for every month since May 2010. While there could be a number of reasons for this (including caution in light of lingering concerns about the health of the global economy, high domestic wage increases through the recession and the low cost of capital/ strong rand that may be encouraging mechanisation), the choppy nature of the SA manufacturing recovery may also be part of the story. The graph on the right plots the monthly PMI versus the actual y-o-y Stats SA manufacturing production numbers since end 2009, i.e. shortly after SA exited the 2008/09 recession. One can almost say that the PMI has experienced a “boom-bust recovery” with an initial strong rebound (PMI reached 58.7 in February 2010) followed by a declining trend to 48.6 in September 2010. Then we saw another robust recovery to 57.2 by March 2011, only to be followed by the recent (moderate to date) easing trend. The nature of the recovery since end 2009 may help explain the hesitancy to employ more people.

Download the report

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

Marketing Executive

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
Geographical Area: Midrand GautengSalary: Market related2 Years Marketing ...More

Head: Supply Chain Management (P6)

  • <500 000 >500 000 Limpopo Permanent Procurement Management Supply Chain
North east of the Tropic of Capricorn, just ...More

Purchasing and Supply Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supply Chain
Purchasing and Supply ManagerThe CSIR has a vacancy ...More

Senior Manager Public Sector

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 Senior Manager Public SectorTotal Cost to Company: R1.1mil ...More

Senior Manager: Mining

  • >500 000 Gauteng Industrial Engineer Permanent Projects / Category Management
Senior Manager: MiningTotal Cost to Company: R900k – ...More

SUPPLY CHAIN MANAGER

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
SUPPLY CHAIN MANAGER(Total Cost to Company R750k – ...More

Master Data Management Advisor

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
 MASTER DATA MANAGEMENT ADVISOR(Total Cost to Company R750k ...More

PRO - Performance Reporting

  • >500 000 Permanent Procurement Consultant Procurement Management Projects / Category Management
PRO - Performance ReportingTotal Cost to Company: R800k ...More

PRO - Risk & Governance

  • >500 000 Gauteng Permanent Procurement Management Projects / Category Management
PRO - Risk & GovernanceTotal Cost to Company: ...More

Supply Chain Site Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Supply Chain Site ManagerTotal Cost to Company R1mil ...More

Chief Financial Officer

  • >500 000 Gauteng Permanent Procurement Officer / Specialist
Chief Financial OfficerTotal Cost to Company R1.5mil – ...More

Process Engineer- WMS

  • <500 000 >500 000 Industrial Engineer Permanent Projects / Category Management Western Cape
Process Engineer- WMS(Total Cost to Company R350K – ...More

Forecast Analyst

  • <500 000 Analyst Permanent Procurement Management Western Cape
Forecast Analyst(Total Cost to Company R350K – R500K) Location: ...More

Group Category Manager: Indirects

  • >500 000 Permanent Procurement Management Projects / Category Management Western Cape
Group Category Manager: Indirects(Total Cost to Company R700K ...More

Group Category Specialist: Chemical

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Group Category Specialist: Chemical(Total Cost to Company R700K ...More

Sourcing Specialist - 3rd party

  • >500 000 Gauteng Permanent Procurement Officer / Specialist Strategic Sourcing
Sourcing Specialist - 3rd partyTotal Cost to Company ...More

Global Procurement Lead (Processing)

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
 Global Procurement Lead (Processing)Location: JohannesburgTotal Cost to Company ...More

Global Supplier Performance Manager

  • >500 000 Gauteng Permanent Procurement Management Supply Chain
Global Supplier Performance Manager Location: Johannesburg  Cost to ...More

Group Customer Service Lead

  • <500 000 >500 000 Analyst Gauteng Permanent Procurement Officer / Specialist
Group Customer Service Lead  Location: Johannesburg As the ...More

Business Intelligence Manager

  • <500 000 >500 000 Gauteng Permanent Procurement Management Supplier / Business Development
Business Intelligence Manager Location: JohannesburgLead the development, implementation, optimization ...More