South Africa’s Kagiso PMI drops to nearly 3-year low in April

By bne IntelliNews May 6, 2014

South Africa’s seasonally adjusted Purchasing Managers’ Index (PMI) dropped by 2.9 points to 47.4 in April, its lowest level since July 2011, Kagiso Tiso Holdings, which sponsors the survey conducted by the Bureau for Economic Research (BER) and CIPS Africa, said in a statement. The country’s manufacturing industry has thus not only swung back to below the 50 mark that signals contraction, but is also underperforming developed economies, with the ISM manufacturing index in the US rising to 54.9 from 53.7 and the Eurozone manufacturing PMI standing at 53.4, its 10-th consecutive month above 50. Peer China also performed better with preliminary manufacturing PMI rising to 48.3 in April from an eight-month low the month before.

Among the headline PMI’s components, the new sales orders index fell by 3.1 points to 43.5, remaining below 50 for a second month in a row, as an ongoing for more than three months now strike in the platinum mining sector has cut orders to mine suppliers. The prolonged strikes over pay shut mines operated by the world’s top three platinum producers - Anglo American Platinum (Amplats), Impala Platinum (Implats), and Lonmin – and forced the three companies to declare force majeure on a number of suppliers.

Another notable development in April is an unexpectedly sharp drop in the price sub-index - to 79.3 from 93.0 in March. According to Andre Coetzee, Managing Director of CIPS Africa, the moderation in the growth rate of input prices reflects an easing in the diesel price in April, as well as the slight appreciation of the local rand currency. According to the latest available data from Statistics South Africa, producer prices rose 8.2% y/y in March, speeding up from a 7.7% y/y growth in February and an average rise of 6.0% in 2013.

The business activity sub-index, which rose to above 50 for the first time in three months in March, returned back to the contraction zone, falling by 2.5 points to 48.5 in April, indicating a continuous slowdown in production since December 2013.

While the index measuring expected business conditions in six months’ time edged down by 0.3 points to 54.2, the PMI Leading Indicator (the ratio between new sales orders and inventories) fell further to a level below 1, implying that inventories are relatively high compared to the demand for manufactured goods, which does not bode well for production going forward.

Kagiso Purchasing Managers Index
  Apr-14 Mar-14 Feb-14 Jan-14 Dec-13 Nov-13
PMI, seasonally adjusted 47.4 50.3 51.7 49.9 49.9 52.4
PMI, not seasonally adjusted 46.0 51.3 52.4 45.3 51.4 58.6
PMI components:            
Business activity 48.5 51.0 48.4 48.0 49.3 54.0
New sales orders 43.5 46.6 53.4 50.2 51.8 51.4
Backlog of sales orders 41.0 44.9 45.8 38.8 37.3 43.2
Inventories 52.5 53.7 59.6 53.9 46.0 53.2
Purchasing commitments 44.0 51.9 49.3 48.3 47.0 55.7
Expected business conditions 54.2 54.5 55.7 61.4 57.9 59.8
Suppliers’ performance 53.9 52.5 53.1 48.8 55.4 52.6
Prices 79.3 93.0 95.1 89.3 80.1 77.8
Employment 44.6 51.8 48.2 50.7 45.8 50.8
Source: Kagiso Tiso            

Related Articles

Russia's Rosneft sets foot in Mediterranean with $1.125bn Eni deal

Russia's largest oil producer state-controlled Rosneft has acquired 30% in the largest natural gas field in the Mediterranean from Italian Eni, the company announced on October 9. Rosneft that ... more

PetroSA, Rosgeo sign $400mn oil and gas exploration agreement for South Africa

South Africa's national oil company PetroSA and Rosgeo, the geological exploration company of the Russian Federation, have signed an agreement on a $400mn oil and gas development project in South ... more

South Africa’s MTN to invest $350mn in Iranian broadband

South Africa’s MTN said it has agreed, on a non-binding and preliminary basis, to invest an initial $350mn into Iranian fixed broadband provider Iranian Net. The investment will give ... more

Dismiss