The all-important business activity sub-index for February declined by more than 26% when compared to January 2015. Although the latest level of the seasonally-adjusted index is more or less on par with the average reading over the last six months, the actual, unadjusted index has been declining for four months now.

Speaking after the release of the PMI figures today, SEIFSA Chief Economist Henk Langenhoven said it is deeply concerning that several other sub-indices indicating future demand (new orders), stock levels and employment, among others, were declining in unison. This substantiated SEIFSA’s views that the accumulation of uncertainties was seriously weighing down on the metals and engineering sector in particular and on manufacturing in general.

“These PMI indicators are short-term warnings that tough times over the medium-term are becoming more probable. SEIFSA has been warning that the sector experienced capacity under-utilisation, low recorded profit margins and very tough domestic and international market conditions,” Mr Langenhoven said.
He added that the intermittent electricity supply was causing serious harm to the sector’s production capabilities.

“One has to look past the upward distortion caused by the seasonal adjustment in January, as well as the considerable instability in recent months, by comparing the longer time periods. But even doing so does not change the picture much. Over the 12- month period (to the end of February 2015), the index declined by 5,5% and 4,9% compared to a year ago, Mr Langenhoven said.

Earlier this year SEIFSA’s analysis indicated that trends in the business activity sub- index level, as well as its rate of change, may have bottomed in the middle of 2014. 

“This conclusion might have been premature if the latest data are anything to go by,” concluded Mr Langenhoven.