The Kagiso purchasing managers’ index (PMI), a gauge of the manufacturing sector’s health, was neutral for October.
“After falling below the key 50 mark in September, the seasonally adjusted Kagiso PMI rose back towards the neutral level during October to reach 49,8 index points,” Theo Vorster, director at Kagiso Securities, said in a statement on Monday.
Below 50 indicates contraction in the manufacturing sector, and above 50 shows expansion.
The employment sub-component of the index declined, but all the other major components showed gains in October. Employment declined by almost four points to 44,8 index points, the lowest level since October 2009.
“Perhaps most encouraging is that the business activity index rose by 2,8 points to 48,7.
“While still below 50, the gain in October suggests that the weak readings during August and September may at least partially have been the result of temporary [strike-related] factors,” said Vorster.
New sales orders rose back above the 50 level, while inventories increased by 5,5 index points to 56,4 — the highest level since early 2008.
“Another positive [and perhaps surprising given that the global economic recovery seems to be losing momentum] development was that purchasing managers were more upbeat about the future,” said Vorster.
“The expected business conditions index rose above 60 index points for the first time since May 2010.”
The PMI is based on a survey conducted monthly by the Bureau for Economic Research at the University of Stellenbosch and the Chartered Institute of Purchasing and Supply. — Sapa