Strikes push PMI to two-year low

Industrial action weighed on the manufacturing sector in July 2011 with the Kagiso purchasing managers’ (PMI) index falling to a two-year low.

PMI hit 44,2 after dropping by 9,7 points in July 2011, according to statistics released on Monday.

The index, which measures the efficiency of the manufacturing sector, has decreased for the fourth straight month.

Industrial action was identified as the main driver of the decline, with the business activity index falling 19.3 index points in July to 35.9—the biggest decline of all PMI sub-indices.

There was a strike in the metals and engineering sector from July 5 to 18, followed by another strike in the chemical, petrol, paper and pulp industry from July 11 that concluded on July 29.

Industrial action is currently being experienced in the mining sector, with 100 000 workers at AngloGold Ashanti, Gold Fields, Harmony Gold and another smaller mining group striking for higher wages.

“This is utterly atrocious—strike activity has weighed in but there is no doubt the economy is in a soft phase through weakened consumer activity and a measured global slowdown,” Kevin Lings, chief economisty at Stanlib, told Mail & Guardian.

Sub-indices such as new sales orders and inventories were the hardest hit, dropping 9,2 and ten points respectively, according to Kagiso’s report.

Job opportunities in the sector also waned, with the PMI employment index falling 8,6 index points to 39,1.

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Nickolaus Bauer

Nickolaus Bauer

Nickolaus Bauer is the Mail & Guardian's jack of all trades news reporter that chases down stories ranging from politics and sports to big business and social justice. Armed with an iPad, SLR camera, camcorder and dictaphone, he aims to fight ignorance and pessimism through written words, photographs and videos. He believes South Africa could be the greatest country in the world if only her citizens would give her a chance to flourish instead of dwell on the negativity. When he's not begging his sub-editors for an extra twenty minutes after deadline, he's also known to dabble in the occasional poignant column that will leave you mulling around in the depths of your psyche. The quintessential workaholic, you can also catch him doing sports on the weekday breakfast show on SAfm and presenting the SAfm Sports Special over the weekend. Read more from Nickolaus Bauer

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