Johannesburg, 2 March 2020 – The Steel and Engineering Industries Federation of Southern Africa (SEIFSA) notes, with concern, the decrease in the seasonally-adjusted Absa Purchasing Managers’ Index (PMI) for the month of February 2020.
Speaking after the release of the data this morning, SEIFSA Economist Marique Kruger said the performance of the index is discouraging and has the potential to impact negatively on the production of companies in both the metals and engineering industry and the broader manufacturing sector.
The composite PMI data for February shows a consecutive deterioration in the level of industrial activity for local businesses, recording 44.3 points compared to 45.2 points in January 2020. Worryingly, Ms Kruger said the latest seasonally-adjusted preliminary data perpetuates a declining trend in the composite PMI in recent months, whereby lower index points were recorded in the preceding months of November 2019, December 2019 and January 2020.
“Generally, the headline PMI and its five sub-indices play an important role in business decision-making processes and the uninspiring performance is worrisome. Specifically, it is disconcerting to note that the majority of the sub-indices deteriorated in February 2020, when compared to January 2020, with the potential for the worrisome trend to continue,” she said.
Nevertheless, the best performing sub-index was the supplier’s performance sub-index, which improved to 58.6 points in February 2020, from 50.8 points in January 2020, while the worst performing one was the new sales orders sub-index, registering 31.2 points in February 2020, from 42.5 points in January 2020.
“Evidently, there is still a long way to go in restoring business confidence in a generally difficult economic environment, underpinned by volatile petrol prices, rising energy and logistics costs as well as uncertain production processes,” Ms Kruger concluded.