May PMI maintains strong showing
The seasonally adjusted Kagiso PMI remained at a relatively high level of 55.1 index points for the second consecutive month during May. While the index has softened somewhat since hitting a peak of 57.2 in March, the May level still suggests solid growth momentum in the factory sector, the group’s website reports.
In terms of the most important PMI subcomponents, the trends of the last number of months were (for the most part) sustained in May. The business activity index declined marginally, but at 56.8 points remained elevated. It was a similar story for new sales orders which stabilized at a high level of 61 index points.
The most disappointing part of the PMI remained the employment situation in the factory sector – the PMI employment index remained stuck below the key 50 index point mark and in fact declined slightly to 48.7 points. With the exclusion of February 2011, the employment index has been below 50 since May 2010.
On a more positive note, input cost pressures continued to ease in May. However, at 80 index points, the PMI price index continues to indicate fast rising manufacturing cost pressures.
Of interest was the sharp (8.6 point) rise in the expected business conditions index to 66.7. Purchasing managers’ confidence about the future increased despite more elevated risks to the global economy, including the worsening European debt situation.