Johannesburg, 1 March 2019 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) is disappointed by a further decline in overall business activity in the broader manufacturing sector, as reflected by the Absa Purchasing Managers’ Index (PMI) released today.
The latest seasonally-adjusted data captured the numbers dipping further below 50, which separates expansion from contraction in manufacturing activity, with the composite PMI decreasing to 46.2 in February 2019, from 49.9 in January 2019. Given that it was the second consecutive decrease recorded in 2019, the trend is a cause for concern. This is especially so given the need to expand industry activity continuously and improve on competitiveness in order to ensure sustainable employment.
“It is more disappointing to note that the deterioration in the headline PMI was underpinned by sharp decreases in the new sales orders and business activity sub-indices. The performance of the employment sub-index is also worrisome, highlighting the prevailing difficulty in sustaining jobs by the broader manufacturing sector,” SEIFSA Economist Marique Kruger said.
She added that since the PMI is an indicator of the economic health of the broader manufacturing sector, including its Metals and Engineering (M&E) cluster of industries, the data highlight the significant challenges still faced by companies in the sector. The volatility in the headline PMI continues to reflect the burden borne by manufacturing companies against the backdrop of fluctuating input costs and increasing fuel and energy costs, largely underpinned by a volatile rand.
“However, given the resilience of the M&E cluster of industries, SEIFSA encourages businesses to plan production processes ahead, despite the prevailing uncertainty, especially given the current slowly improving economic environment,” Ms Kruger concluded.