Manufacturing deep in doldrums

The overall seasonally adjusted PMI declined 5.3 index points to 43.8 from 49.1 in May. A level above 50 shows expansion in the sector, and below shows contraction.

"A sharp slowdown in business activity contributed significantly to the decline in the overall index. The seasonally adjusted business activity index fell to 38.7, lower than the readings posted in 2003 when the sector was in recession," said André Roux, head of fixed income at Investec Asset Management.

Furthermore, demand conditions continued to weaken and the seasonally adjusted index of new sales orders weakened to 43, its lowest level in five years.

"While demand is slowing both domestically and abroad, the accelerated decline in new sales orders may also be revealing the relative un-competitiveness of local producers," Roux said.

Pressure on input prices persisted during June. At 90.8, the PMI price index remained above 90 for the fourth consecutive month. "While the index has softened somewhat after reaching a peak in April, the persistence and level is indicative of the magnitude of the acceleration in resource prices," he said.

The further decline of the employment index to 44 points indicates a clear contraction in employment in the manufacturing sector.

"The combination of slowing demand and input cost pressures is reflected in falling purchasing commitments and somewhat weaker readings on expected business conditions six months out. The sector is facing significant headwinds over the medium term," Roux concluded.

- Fin24.com