Improved business activity pushes PMI above crucial 50-point mark

| 0 Comments

PMI_Economy.jpgThe Purchasing Manager's Index (PMI) edged above the neutral 50-point mark for the first time since May 2017. The index rose to 50.8 index points in February, up from 49.9 in January. This means that the average for the first two months of 2018 is slightly above 50, which bodes well for the manufacturing sector.

The increase in the headline index was driven by solid improvements in the business activity and new sales orders indices, which together account for more than half of the PMI's weight.

The business activity index rose by another 2.1 points after a 9.3-point surge in the previous month. The index is now at the highest level since April 2016. The fact that the index came in well above the neutral 50-point mark during the first two months of 2018 bodes well for actual production growth in the first quarter of the year.

The new sales orders index rose by 2.3 points to reach 52.7 in February. The improvement in demand (some respondents pointed to stronger local demand) supported an acceleration in output growth, with the business activity index rising to 54.1 from 52.0 in January.

Unfortunately, the employment index remained subdued despite the apparent recovery in output. The index nudged lower to 45.3 points in February and has been hovering around 45 points for about ten months. The apparent recovery in output (as suggested by the increase in business activity) would have to be sustained for the employment index to increase going forward, noted BER.

Arguably, the most positive outcome of the February PMI survey was the index tracking expected business conditions in six months' time, rising to the highest level since 2001. It surged to 79.1 points after solid increases in December and January, which means the index is now almost 30 points above November's level. The sustained rise in optimism is likely supported by continued positive global growth prospects. More importantly, the outlook for the local economy has also improved over recent months. The fact that the PMI's implied leading indicator is also above one, with new sales orders outstripping inventory levels, is another positive sign.

The purchasing price index fell sharply to 59.6 in February from January's 70.4, and is now more than 20 points below the level reached as recently as November 2017. The moderation in cost pressure is driven by the (on average) stronger rand exchange rate and lower Brent crude oil price. The stronger rand means that imported raw materials and intermediate products are cheaper in rand terms. However, over the longer run, this could hurt local exporters' competitiveness in global markets.

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

Risk Control Manager

  • <500 000 Gauteng Permanent Procurement Consultant Projects / Category Management
R450 000 - R550 000 per annum.Location: Johannesburg ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Procurement Consultant
Salary: R500 000 - R500 000 per annum.Location: ...More

Fuel Logistics Manager

  • <500 000 Logistics & Warehousing Operations, Planning & Inventory Permanent Western Cape
Salary: R600 000 - R720 000 per annumLocation: ...More

Supply Chain Manager

  • <500 000 Gauteng Permanent Projects / Category Management Supply Chain
R650 000 - R700 000 per annum.Location: Johannesburg.A ...More

SENIOR BUYER

  • <500 000 Buyer Gauteng Permanent Supply Chain
R500 000 - R550 000 per annum,Location: Midrand,A ...More

Supply Chain Analyst

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

Supply Chain Manager

  • <500 000 Gauteng Permanent Supplier / Business Development Supply Chain
Salary: R600 000 - R700 000 per annum,Location: ...More

Demand Planner

  • <500 000 Gauteng Logistics & Warehousing Permanent Projects / Category Management
Salary: R450 000 - R550 000 per annum,Location: ...More

Demand Planner

  • <500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
Salary: R500 000 - R500 000 per annum,Location: ...More

Warehouse and Distribution Manager

  • <500 000 Logistics & Warehousing Permanent Procurement Management
Salary: R650 000.00 - R850 000.00 CTC pa,Location: ...More

National Supply Chain Manager

  • <500 000 Gauteng Permanent Procurement Management Supply Chain
Salary: R900 000 - R1 000 000 per ...More

Procurement Specialist

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
Salary: R380 000 - R420 000 per annum,Location: ...More

Supply Chain Analyst Lead

  • <500 000 Analyst Gauteng Permanent Supply Chain
Salary: R1 000 000 - R1 100 000 ...More

CIPS Tutor and Coordinator

  • Gauteng Permanent Projects / Category Management Supply Chain
Commerce Edge South Africa,Division: Commerce Edge Academy,Location: Johannesburg, ...More

Warehouse Manager

  • <500 000 Gauteng Industrial Engineer Logistics & Warehousing Permanent
Salary: R480 000 - R600 000 per annum.Location: ...More

Senior Buyer

  • <500 000 Buyer Gauteng Permanent Procurement Consultant
Salary: R600 000 - R650 000 per annum.Location: ...More

Operations Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Salary: R700 000 - R800 000 CTC per ...More

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