Barclays’ PMI peaks as major sub-indices top 50
The Barclays purchasing managers’ index reached 54.9 points in April, with all five of the PMI’s major subcomponents now above 50 points for the first time since August 2013.
|||Johannesburg - The seasonally adjusted Barclays purchasing managers’ index (PMI) reached 54.9 points in April, with all five of the PMI’s major sub-components now above 50 points for the first time since August 2013.
The PMI rose from 50.5 in March to more than 10 points above the level recorded three months ago.
The new sales orders index also rose for a third consecutive month and the improvement in demand filtered through to higher output.
In a note yesterday, Investec economist Kamilla Kaplan said the increase in PMI could be temporary. “It is difficult to assess whether the sector is experiencing renewed fundamental strength based on one month’s reading,” she said.
The business activity index also rose by 8.7 points and broke through the 50-point mark. It has been below 50 points since August.
Barclays said: “The increase is an encouraging sign that the manufacturing sector may have reached a bottom and that output could improve during the second quarter – barring any unexpected disruptions such as a return of load shedding… or labour unrest in the manufacturing or closely linked mining sector.”
The price index fell for a second month to 77.7 points after peaking at 90.7 in February. Kaplan said rand appreciation had alleviated import price pressures of raw materials and intermediate goods.
“However, operating costs are expected to remain broadly elevated in view of the above-inflation electricity tariff increases, higher petrol and diesel prices and the potential for substantial labour cost increases,” Kaplan said.
“For instance, wage negotiations in (the) automotive industry are scheduled later this year. Early indications suggest the trade union may enter negotiations with a demand of a 20 percent increase.”
Sanisha Packirisamy, an economist at MMI investments and savings, said yesterday that the outlook for employment in the manufacturing sector remained bleak particularly as the recent upward momentum in the PMI was unlikely to be maintained at its current pace.
BUSINESS REPORT