South Africa: PMI remains stuck in contractionary territory in August
September 5, 2016
The Standard Bank Purchasing Managers’ Index (PMI) inched down to 49.8 in August from 49.9 in July. As a result, the index remained below the 50-threshold which separates expanding from contracting conditions in business activity. The index has been back in contractionary territory since June, after a brief upturn to expansionary terrain in May.
August’s virtually steady reading mainly reflected a stabilization in output. While new orders and employment improved slightly from July, producers’ purchasing activity continued to decline. Suppliers’ delivery times improved considerably, mainly due to weak demand and greater availability of inputs. As for price developments, input prices and output charges both increased only slightly. Kuvasha Naidoo, Economist at Standard Bank, added in the press release issued by IHS Markit that, “the stabilisation in August’s PMI […] comes as output (supply) in the private sector rose to 50 points following 15 consecutive contractionary monthly prints. New orders rebounded in August after contracting in July, resulting in the PMI leading indicator rising to above 1 as the stocks of purchases sub-index fell to 50. The employment sub-index subtracted from the headline print despite remaining in expansionary territory in August. The largest drag, however, was suppliers’ delivery times […].”