Johannesburg, 3 June 2019 – A dip in overall business activity in the broader manufacturing sector is disappointing and the result of the lead indicator for May 2019 does not bode well for future activity of companies in the broader manufacturing sector, so said Steel and Engineering Industries Federation of Southern Africa (SEIFSA) Economist Marique Kruger.

The ABSA Purchasing Managers’ Index (PMI) decreased from 47.2 points in April 2019 to 45.4 points in May 2019, providing discouraging forward-looking insight into the manufacturing sector’s health, while still trending below the benchmark level of 50, which separates expansion from contraction.

Speaking after the release of the data this morning, Ms Kruger said the headline PMI and its five main sub-indices play an important role in businesses’ decision-making processes.

“The deterioration in the headline PMI is underpinned by decreases in the business activity and new sales orders sub-indices, with the business activity, new sales orders, inventory and employment sub-indices trending below the neutral 50-point mark in May 2019. However, the supplier performance sub-index was the best performer, increasing to 55.7 points in May 2019,” Ms Kruger said.

She said generally the information on all sub-indices highlights volatility in the trend, which is worrying to the broader manufacturing sector. She said SEIFSA, which is disappointed with the decrease in the data, hopes for an improvement in business activity in the short term.

SEIFSA is a National Federation representing 21 independent employer Associations in the metals and engineering industries, with a combined membership of 1600 companies employing around 200 000 employees. The Federation was formed in 1943 and its member companies range from giant steel-making corporations to micro-enterprises employing fewer than 50 people.