Speaking after the release of the PMI figures, Mr Langenhoven added that confidence remains at its lowest in three years.
The crucial sub-index for‘business activity has not declined much on June 2014 (0,3%) and has only deteriorated slightly (-1,7%) when measured on a 12-month basis (i.e. 12 months ended in July 2014 compared to 12 months ended in July 2013). The first seven months of the year, however, were 10% lower than the same period in 2013. The activity index in July 2014 was still 24% lower compared to July 2013 (the same decrease as recorded for June).
Mr Langenhoven said that the July PMI numbers are gauging the worst of the impact of the metals and engineering strike. Production in the sector increased up to April and then declined in May for pre-emptive inventory and export purposes, according to the latest trade figures released recently. The new-orders sub-index stabilised in July and, coupled with lower production, caused inventory levels to be somewhat run down. The latter trends are expected to continue for a short period as production ramps up in the sector.
Costs in terms of value added lost within the metals and engineering sector is estimated at R6 billion, with the strike lasting 20 working days (ignoring 24-hour, seven-days-a-week operations). The direct impact on employment is yet to be felt going forward, Mr Langenhoven added.
The PMI employment sub-index declined by 11% between June and July 2014 and is 8% lower compared to July 2013. For the year to date (7 months), it improved by four percent and, on a 12-month basis, by 2,6%. This is explained by the higher production and employment measured in the run-up to the strike.
“The jury is out on what the impact of the last month will be on the economy. It is sincerely hoped that this was the bottom of the trough,” Mr Henk Langenhoven concluded.