PMI off to slow start for 2014 - retrenchments hit 10-yr high

| 0 Comments

 

SlowStart.jpgThe seasonally adjusted Kagiso Purchasing Managers’ Index™ (PMI™) remained unchanged at 49.9 index points in January 2014. The fact that the PMI was just below the neutral 50-point mark suggests that the factory sector experienced a slow start to the new year, said Abdul Davids, Head of Research at Kagiso Asset Management.


January’s Business Activity and New Sales Orders indices weakened as demand remained fairly subdued. The Business Activity Index fell for the second consecutive month to reach 48 – its lowest level since March 2013.


“Business activity at such a low level is not conducive to actual manufacturing production growth in the first quarter of 2014,” said Davids. His remarks are supported by labour specialist Adcorp's announcement that South Africa’s weak economy continued to shed jobs in January, with retrenchment levels at a 10-year high.


Adcorp’s Employment Index report on Monday showed that the economy shed 36 290 jobs last month, most of them in manufacturing and construction. The report tracks what happens to jobs on a monthly basis while the more official quarterly employment data is released by Statistics SA.


"The retrenchment rate is now at a 10-year high while the job mobility rate is at a 10-year low," Adcorp labour market economist Loane Sharp said.


In contrast, the Euro zone’s manufacturing sector started 2014 in much better shape than expected. The preliminary PMI reading showed underlying demand for manufactured goods was at its strongest level in nearly three years, lifting the headline index to a 32-month high of 53.9 index points. However, the Chinese manufacturing PMI dipped below 50 index points, adding to concerns that growth in the world’s second largest economy is slowing.


The deterioration in the Business Activity and New Sales Orders indices was balanced by a more pronounced improvement in Employment and Inventories.


After declining by five points in December, the Employment Index rose to 50.7 points in January. The index has been hovering around the 50-point mark for a few months and, according to Davids, this may signal a stabilisation in labour demand after continued job shedding following the 2008/09 recession.


The Price Index surged from 80.1 in December to 89.3 in January – its highest level since mid-2008. “This sharp increase is likely due to the weaker Rand elevating the costs of imported input goods,” says Davids.

 

AbdulDavids2.jpgThe Inventories Index rose from 46 points to 53.9 in January. The rebound in inventory levels without an accompanying improvement in new sales orders does not generally bode well for production going forward. However, Davids points out that manufacturers may have stocked up in anticipation of further input price increases.


Despite tough conditions, manufacturers were still optimistic as the index measuring Expected Business Conditions in six months’ time rose by 3.5 points to 61.4. “Given that local demand is likely to remain relatively weak, manufacturers may be expecting a boost to exports due to improved demand from the Eurozone and a possible competitive edge from the weak rand,” says Davids. However, he cautions that the combination of higher inventory levels and weaker orders does not bode well for future production.


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

Demand Planning Manager

  • <500 000 Gauteng Operations, Planning & Inventory Projects / Category Management
(Total Cost to Company R750k - R900K) excluding ...More

Global Category Manager: CONTRACTS

  • <500 000 Buyer Commodities Contract Gauteng
Total Cost to Company R1mil - R1.2mil excluding

Project Manager :12-18 MONTH CONTRACT

  • <500 000 Contract Procurement Officer / Specialist Projects / Category Management
Description:A well-known retail organization is looking for an ...More

Procurement Analyst

  • <500 000 Analyst Gauteng Permanent Procurement Management
Description:A leading infrastructure development group with strong presence ...More

Commodity Manager: Fuels and Lubes

  • <500 000 Commodities Gauteng Permanent Strategic Sourcing
Description:Ensuring continuity of supply in line with business ...More

Senior Facilities Manager

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
(Total Cost to Company R800K - R900K) Description: ...More

Supply Chain Analyst

  • <500 000 Analyst Permanent Supply Chain Western Cape
(Total Cost to Company R350K - R550K) SOUTHERN ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
(Total Cost to Company R450k - R550k, dependent ...More

Procurement Specialis

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
(Total Cost to Company R700k - R800k including ...More

Solutions Architect

  • <500 000 Analyst Gauteng Operations, Planning & Inventory Permanent
(Total Cost to Company R1.3Mil - R1.1Mil including ...More

Engineering Manager

  • Gauteng Industrial Engineer Permanent Procurement Management
Total Cost to Company R850k - R950K including ...More

Country Head of Procurement

  • Permanent Procurement Management Procurement Officer / Specialist
https://careers.peopleclick.com/careerscp/client_gsk/external1931/gateway.dofunctionName=viewFromLink&jobPostId=359235&localeCode=en-us CBS Procurement,Hub Head of Procurement To lead, ...More

Demand Planner

  • <500 000 Gauteng Operations, Planning & Inventory Permanent Projects / Category Management
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Planning/Demand%20Planner/TP2005490/MSe Category: PlanningPosition Title: Demand PlannerSalary: R600 000 ...More

Head of Procurement

  • <500 000 Gauteng Permanent Procurement Management Procurement Officer / Specialist
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Procurement/Head%20of%20Procurement/TP2005488/ZBuCategory: ProcurementPosition Title: Head of ProcurementSalary: R1.3 million ...More

Warehouse and Distribution Manager

  • <500 000 Gauteng Logistics & Warehousing Permanent Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Logistics/Warehouse%20Distribution%20Manager/TP2005455/TMa Category: Supply ChainPosition Title: Warehouse and Distribution ...More

Supply Chain Manager

  • <500 000 Mpumalanga Permanent Procurement Officer / Specialist Supply Chain
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Mpumalanga/Supply%20Chain/Supply%20Chain%20Manager/TP2005448/LMa Category: Supply ChainPosition Title: Supply Chain Manager ...More

Industrial Engineer

  • <500 000 Gauteng Industrial Engineer Operations, Planning & Inventory Permanent
https://www.tech-pro.co.za/pages/jobdetail.aspx#!Gauteng/Consulting/Continuous%20Improvement%20Manager/TP2005489/SNh Category: ConsultingPosition Title: Industrial EngineerSalary: R900 000 ...More

Operations Manager

  • >500 000 Gauteng Operations, Planning & Inventory Permanent Supply Chain
Our client within the FMCG industry with a ...More

Warehouse and Distribution Manager

  • >500 000 Gauteng Logistics & Warehousing Operations, Planning & Inventory Permanent
An exciting opportunity awaits for a Warehouse and ...More

Demand Planner

  • <500 000 Permanent
Get an opportunity to be part of one ...More