PMI above neutral mark for eighth month

Cape Town - In April the Standard Bank South Africa Purchasing Managers' Index (PMI) moved closer to 50.0, but remained above this neutral mark for the eighth month running in April.

According to the latest index report, this signals the longest sequence of overall improvement in operating conditions in over four years.

The survey is produced by Markit and has been conducted since July 2011. It provides an early indication of operating conditions in the country.

The PMI fell from 50.7 in March to 50.3 in April, signalling only marginal growth that was the weakest over the current expansionary sequence, according to the PMI report.

The April report also shows business activity declined for the first time in nine months, and input price inflation eased further to a new survey low.

According to Standard Bank economist Thanda Sithole, April’s print was the lowest since August 2016, but encouragingly above the 49.5 and 49.7 averages recorded for 2015 and 2016 respectively.

"The output index fell to 49.6 after remaining above 50 since September 2016, primarily due to slow sales and economic and political uncertainty. New orders and employment indices fell, but remain in expansionary terrain," added Sithole.

"New export orders remained in contractionary territory, signalling uncertainty and weak confidence.”

New business

April marked the sixth consecutive month of growth in new work, although the rate of expansion slowed to a marginal pace and was at the weakest since last November. A further decline in new export orders weighed on growth of total new business.

Inflows of new work spurred further growth of purchasing activity by SA private sector companies in April. Input volumes rose for the seventh month running and at the fastest rate in three months. Similarly, the level of inputs held in stock increased for the sixth consecutive month and at the fastest rate since January.

With new business rising only fractionally, companies were able to reduce the level of outstanding work in April. The volume of total business activity declined for the first time since July 2016, although at a marginal pace.

Inflation

Inflationary pressures slowed further in April, according to the report. The four price indices all remained above 50.0, signalling inflation, but three hit record lows. The exception was staff costs, which were nonetheless the fourth-lowest on record.

Private sector employment in South Africa increased for the tenth month running in April, the longest period of job creation in nearly four years. The rate of growth slowed, however, to only a fractional pace in the latest period, according to the report.

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