South Africa’s Purchasing Managers Index (PMI) fell to its lowest level in more than a year in August, but prospects were still positive, sponsor Investec said on Monday.
The monthly measure of manufacturing activity dropped to 54,3 from 57,7 in July, largely due to a sharp fall in growth of business activity and slower sales growth as volatility hit global markets amid fears of easing world growth.
”The latest reading sees a further deceleration from the elevated levels in the first quarter,” Investec Asset Management portfolio manager Vivienne Taberer said.
”The month saw significant volatility in global financial markets. Both the currency as well as the JSE all-share index reacted negatively, but regained its entire losses by month-end.”
However, the index remained above 50, which signalled expansion, and the expected business conditions indicator, although down slightly, remained strong at 65,2, pointing to forecasts of growth.
Manufacturing — South Africa’s second biggest sector — has begun to feel the impact of three percentage points of interest-rate increases since June last year.
Official data last week showed growth for the sector fell to its lowest level in more than three years at an annualised 0,5% in the second quarter of 2007 compared with 4,7% in the first quarter.
The central bank raised its repo rate by 50 basis points in June and August to 10% to try tame rising inflation, adding to four increases during the second half of 2006.
Some analysts expect another increase next month after worse-than-expected consumer and producer inflation numbers released last week.
Taberer said the business activity indicator dropped 7,5 index points to 50,9, while growth in new sales orders was down at 57,8 from 61,3 previously.
But the employment index was up at 56,1, indicating the sector was creating much-needed jobs, while price pressures appeared to be moderating.
”The PMI prices index dipped below 80 for the first time since the first quarter of 2007, but at 79,3 this index remains at a high level,” she said. ”Somewhat lower international oil prices may have contributed to the slight moderation.”
The targeted CPIX consumer inflation measure edged higher in July to 6,5% year-on-year, the fourth consecutive month it has outpaced the central bank’s 3% to 6% band. — Reuters