January PMI may overstate improvement in the manufacturing sector

| 0 Comments

 

AndreCoetzee.jpgA smaller-than-usual decline in the non-seasonally adjusted January PMI resulted in the seasonally adjusted PMI increasing significantly and perhaps overstating the improvement in actual manufacturing output in January, said Andre Coetzee, MD of CIPS Africa.


Manufacturing may be starting the year on good footing, but underlying conditions are unlikely to be as rosy as suggested by the seasonally adjusted figure.


It is not unusual for the adjusted and unadjusted figures to move in divergent directions and the divergence tends to be particularly large in January as the seasonal factor is typically low, said Coetzee.


“The unadjusted PMI is inclined to fall in January, but this January’s drop was smaller than usual. As a result, the seasonally adjusted figure increased significantly and may overstate the improvement in business conditions in the factory sector in January,” he said.


The seasonally adjusted PMI increased by 4 index points to 54.2, while the non-seasonally adjusted PMI figure declined to 48.2 index points.


Statistics SA figures released on Tuesday showed that manufacturing production rose by 1.1% in December 2014 compared with a year earlier.


The increase in output was mainly owed to higher production in the food and beverages division.


Stats SA also reported that seasonally adjusted manufacturing production increased by 2.5% in Q4 2014 compared with Q3 2014.


The main contributors to the 2.5% increase were the petroleum, chemical products, rubber and plastic products division and the basic iron and steel, nonferrous metal products, metal products and machinery division.


Manufacturing data were in line with the findings of the seasonally adjusted PMI.


The rise in the seasonally adjusted PMI figure was almost fully driven by a jump in the seasonally adjusted business activity index, which rose to 61.7 in January from an average of 51.6 in the fourth quarter. This points towards an acceleration in output in January compared to December.


The decline in the unadjusted figure was smaller than usual, amplified by the low seasonal factor and explains the large jump in the seasonally adjusted index. The non-seasonally adjusted figure fell from 49.3 to 48.8 index points, which was still significantly higher than the 38.8 recorded in January 2014.


A 1.1 index point rise in the new sales orders index to 53.7, as well as an increase in the inventories index to 61.2 further supported the uptick in the PMI, albeit to a lesser extent than business activity. On the other hand, the employment index continued to weigh on the headline index and dipped to 43.8 in January from 46.3 in December.


Sharply lower international oil prices and domestic fuel prices resulted in a fourth consecutive decline in the price index to 61.9. The continued moderation in the rate of input cost increases, as well as the expectation that oil prices will remain low for coming months, likely underscores why purchasing managers are optimistic about the near future, concluded Coetzee.


The index measuring expected business conditions in six months’ time rose to 66.9.


Read the full PMI report

Leave a comment


 

 

Career opportunites

Planner

  • <500 000 Gauteng Operations, Planning & Inventory Supply Chain
Are you looking for new career opportunities as

Procurement Specialist

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing Supplier / Business Development
As a specialist Supply Chain recruiter, I am

Logistics Controller

  • <500 000 Gauteng Logistics & Warehousing Procurement Officer / Specialist
Seeking dynamic up and coming candidates looking for

Supply Chain Manager

  • >500 000 Permanent Procurement Management Supply Chain Western Cape
As a specialist Supply Chain recruiter, I am

Business Process Specialist

  • <500 000 Gauteng Procurement Consultant Procurement Officer / Specialist Supply Chain
A company within the financial services sector is

LOC Procurement Manager

  • Gauteng Permanent Procurement Management Procurement Officer / Specialist
Your Responsibilities: Job Purpose To be the interface ...More

Account Manager

  • >500 000 Procurement Officer / Specialist Supplier / Business Development Western Cape
Key Performance Areas:• To ensure that all aspects

Consultant

  • >500 000 Gauteng Procurement Consultant Strategic Sourcing Supply Chain
Key Performance Areas:• You'll be concerned primarily with

Commercial Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Technical Buyer

  • <500 000 Buyer Contracts Procurement Officer / Specialist Western Cape
A well-known Mining company is seeking the services

Business Development Executive

  • >500 000 Gauteng Supplier / Business Development
A retail solutions company is seeking a New

Financial Manager

  • >500 000 Contract Operations, Planning & Inventory Procurement Management Western Cape
Looking for an unemployed CA (SA) in Cape

Chief Financial Officer

  • >500 000 Gauteng Operations, Planning & Inventory Procurement Management
An exciting opportunity exists for a CFO with

Procurement Consultant

  • >500 000 Gauteng Procurement Officer / Specialist Strategic Sourcing
Key Performance Areas: A profound knowledge of sourcing

Commodity Specialist: IT

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Effectively applies acquired technical/functional skills

Senior Consultant

  • >500 000 Gauteng Projects / Category Management Supplier / Business Development
Key Performance Areas:• Adheres to best practice processes

Logistics Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Procurement Management
Key Performance Areas:• Manage warehousing and distribution 3PL's

Head of Franchise Network

  • >500 000 Contracts Operations, Planning & Inventory Western Cape
The opportunity to work for a multinational retail

National Driver Manager

  • >500 000 Analyst Contracts Logistics & Warehousing Operations, Planning & Inventory Western Cape
The opportunity for an extraordinary individual to join

Commodity Specialist: Industries

  • >500 000 Commodities Gauteng Procurement Officer / Specialist
Key Performance Areas:• Under the guidance of the