September PMI: Falls back below 50
A worrying development in September was that all five of the sub-indices used to calculate the overall PMI lost ground. By far the biggest decline was for the suppliers’ performance index, which shed 5.9 points to 48.7 – the lowest level since February 2010.
Equally concerning was the further 1.1 point decline for the business activity index to 45.8 index points. As was the case in August, strike activity in the vehicle sector may provide part of the explanation for the weak September figure.
Of the five key indices, only new sales orders managed to remain above the 50 level that separates expansion from contraction in September. However, the index lost 1.8 points to just above 50 at 50.2.
After rising robustly above the 50 mark in the early stages of 2010, the PMI employment index posted the fifth consecutive sub-50 reading in September at 48.1. Based on these numbers, factory output levels are set to moderate further during Q3 with the manufacturing sector unlikely to see any meaningful job growth in the near term.
For further information:
Theo Vorster, Kagiso Securities Tel: (011) 341 3042 Mobile: 083 260 2354
Hugo Pienaar, Bureau for Economic Research Tel: (021) 887 2810