South Africa: PMI eases on softer output but points to further expansion in April
May 4, 2018
In April, the Standard Bank Purchasing Managers’ Index (PMI) edged down a further 0.5 points to 50.4 points, dipping below the survey’s long-run average of 50.7 points but recording a third consecutive month of expansion—the longest streak of private-sector growth in more than a year.
April’s softer reading was due mostly to a contraction in output which some saw as a consequence of the country’s recent listeria outbreak, as well as recent strike actions and the VAT hike (from 14.0% to 15.0%). That said, new orders grew at a faster rate and hiring accelerated at the quickest pace in more than a year. Meanwhile, purchasing activity remained broadly stable as higher new order volumes were offset by weaker output. In turn, delivery times lengthened only marginally, while input and output costs each saw moderate increases in the month.
Commenting on April’s reading, Thanda Sithole, Economist at Standard Bank, noted:
“Over the near term, the PMI should continue showing signs of improving domestic business conditions supported by the improved domestic political backdrop, looser monetary policy and stable ratings outlook. But also the recent survey has shown significant improvement in domestic consumer confidence. This should also provide further support to the PMI ahead.”
Author: Christopher Thomas, Economist