Manufacturing conditions improved in August

2020/09/01 20:24:00

Manufacturing conditions improved in August

Manufacturing conditions improved in August

The Absa PMI increased to 57.3 index points with business activity and new sales orders picking up

Picture: SUPPLIEDAn index measuring manufacturing sentiment jumped to a 13-year high in August after further easing of coronavirus restrictions supported domestic demand and exports.Absa's Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research, surged to 57.3 to from 51.2 in July, the lender said on Tuesday in a statement. The median estimate of six economists in a Bloomberg survey was 50.9.

The reading is at the highest level since March 2007 and marks the first time since 2016 that the index has spent four straight months above 50, which signals expansion. However, it probably overstates the extent of the recovery in a sector that was almost completely shut in April and factory output is unlikely to have returned to pre-virus levels.

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Manufacturing conditions improved in AugustThe ABSA PMI increased to 57.3 index points with business activity and new sales orders picking up

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01 September 2020 - 17:12 Picture: SUPPLIED An index measuring manufacturing sentiment jumped to a 13-year high in August after further easing of coronavirus restrictions supported domestic demand and exports.01 September 2020 - 11:50 Odwa Mjo Picture: SUPPLIED Business conditions in the manufacturing sector improved in August as SA moved to level 2 of the coronavirus lockdown, according to the Absa manufacturing purchasing managers’ index (PMI) The Absa PMI increased to 57.Tuesday 1 September 2020 - 10:19am Source.Published by Arena Holdings and distributed with the Financial Mail on the last Thursday of every month except December and January.

Absa's Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research, surged to 57.3 to from 51.2 in July, data showed on Tuesday.2 in July, the lender said on Tuesday in a statement. The median estimate of six economists in a Bloomberg survey was 50. The sector accounts for about 13% of GDP.9.

The reading is at the highest level since March 2007 and marks the first time since 2016 that the index has spent four straight months above 50, which signals expansion.  “Despite the level of the PMI more than likely overstating the extent of the recovery, the renewed increase in the PMI in August is encouraging, especially as it seems to be supported by both local and export demand improving, ” Absa said. However, it probably overstates the extent of the recovery in a sector that was almost completely shut in April and factory output is unlikely to have returned to pre-virus levels. Given the record drop in output in April, continued restrictions on the sector and social-distancing requirements that are preventing factories from operating at full capacity, it will take months until activity returns to pre-lockdown levels, Absa said.” The index tracking expected business conditions in six months’ time rose to the highest level in about 18 months. The index has flitted between expansion and contraction for most of the past decade as power shortages and low business confidence weighed on a sector that accounts for about 13% of GDP. Restrictions initially shuttered almost all activity, including the manufacturing sector from March 27, before a gradual and phased reopening of the economy started in May.

While restrictions were eased to level 2  in mid-August, many companies had closed down permanently or fired workers during the lockdown. While the employment subindex ticked up to 39 from 33, the large gap between it and the gauges that measure activity and demand suggest that manufacturers are still shedding jobs, albeit at a slower pace, Absa said. The business activity subindex of the PMI rose to 67 from 62.9 and the new sales orders subindex increased to 71.1 from 53.

4. The index tracking expected business conditions in six months’ time rose to an 18-month high of 63.4 as purchasing managers turned “notably more optimistic” about future conditions, the lender said. Bloomberg .