The seasonally adjusted Kagiso PMI experienced a modest improvement in July, gaining 1.1 index points to 49.5, reports the Kagiso website. While the level of the index indicates that the manufacturing sector remains under pressure, a less pessimistic way of looking at the numbers is that it is the first time in five months that the PMI did not decline further.
The most gratifying development in July is the 5.7 point gain for the business activity index to 50.9. Unfortunately, the sustainability of the move back above 50 is questionable as the new sales orders index slipped below the key 50 mark (to 48.5).
Other notable trends in July include another 4.7 index point decline for the PMI price index to 59.4. A welcome development is that the PMI employment component rose to 47.6 from 45.9, albeit still indicating that the sector is shedding jobs.
In terms of the outlook, the expected business conditions index saw a fifth consecutive decline to 57.7.
In summary, while the July PMI points to some consolidation following a fairly steep decline from the high reached in February, the level of the index suggests that the manufacturing sector slowdown continued at the start of 2010Q3.
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