The seasonally-adjusted overall index remained unchanged when July 2015 is compared to June 2015, but showed a substantial improvement of 11,3% when July 2015 is compared with July 2014.
Speaking after the release of the PMI figures, SEIFSA Chief Economist Henk Langenhoven said that the business activity sub-index showed extreme variations. July recorded a 3% improvement on June, and the average for the year to date was 9% higher than last year.
“July 2015 is 30,5% higher than the strike-hit July 2014 . However, the 12-month comparison, ending July 2015, is probably a better indication of activities; the latter was 3,3% higher than the same 12 months, ending July 2014,” Mr Langenhoven said.
He said that the distorting impact of the volatile first seven months of 2014 was evident in the year-to-date numbers as well as the year-on-year comparisons.
“To evaluate if some normality is returning to the metals and engineering sector, comparing July with June (2015) is appropriate. Taking this approach, the PMI subindices spell out a dire situation:
- New sales orders declined by 3,7%;
- Inventories are increasing (+6%);
- The price index declined by 2,7%; and
- The employment index declined by 3,7%;
The figures above indicated a weakening situation for the manufacturing sector generally and confirmed similar observed patterns within the metals and engineering sector.
“It is perplexing that the business activity, purchasing commitment and expected business activity sub-indices are improving slightly. This ambiguity was mentioned by the Bureau for Economic Research in its press release yesterday,” Mr Langenhoven said.
These PMI indicators, therefore, did not change SEIFSA’s views that tough times lie ahead in 2015. The production numbers to be released shortly by Statistics South Africa will give some indication of the actual, current economic activity.
“Nevertheless, the anecdotal evidence from the metals and engineering sector is very concerning,” Mr Langenhoven concluded.