The seasonally adjusted index improved 6% when compared with July, boosting much needed confidence levels for the sector.
SEIFSA Chief Economist Henk Langenhoven said that the PMI’s business activity sub-index was of interest to the metals and engineering sector since it leads production trends by between a year and 18 months. This index improved by 20% when August is compared with July 2014.
“However, confidence levels are highly volatile and very fragile. Although the monthly improvement is very good news, comparisons looking at the eight months of 2014 relative to last year, and the 12 months ending in August compared to the same period last year are all still negative, albeit not as bad as measured in July,” Mr Langenhoven said.
The PMI results indicated that:
- The average level for the first eight months of the year was 11% lower than the same period during 2013,
- The August 2014 level was 18% lower than August 2013, and
- On a 12-month comparison, the average level by the end of August was 5% lower than a year ago.
The July PMI data were surveyed during the month of the strike in the metals and engineering sector. The latest data reflect the recovery of confidence during August when compared to July.
“If the improvement in the overall expected business conditions in 12 months recorded is anything to go by, then the recovery will continue. Purchasing commitments also improved strongly, indicating some resilience in demand in the economy. Inventories recovered somewhat, which may show that the return to normal production levels will take some time,” Mr Langenhoven said.
He added: “There are clearly some signs of recovery in the manufacturing sector generally and in the metals and engineering sector specifically, which we hope indicates the bottom of the trough.”