South Africa: PMI gains substantial ground in May
June 5, 2016
The Standard Bank Purchasing Managers’ Index (PMI) increased from 47.9 in April to 50.2 in May, which marked the best figure since April 2015. As a result of the increase, the index crossed the 50-threshold, which separates expanding from contracting conditions in business activity. This is the first time that the index rests above the threshold since June 2015.
May’s improvement came on the back of an increase in demand from export markets, which, in turn, supported an improvement in overall new businesses. Moreover, operating conditions in the private sector improved over the previous month. Analysts added that: “The rise in the PMI was driven by new orders on the back of rising external demand as well as new clients and investments, which also had a positive impact on employment during the month. However, challenging economic conditions resulted in actual output remaining in contraction. Output was also negatively impacted by rising input costs despite expanding new orders. Both input and output costs rose during the month.”
Author: Dirina Mançellari, Senior Economist