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SA factories pick up pace

Cape Town - The seasonally-adjusted Kagiso Purchasing Managers' Index (PMI) picked up some momentum in November, Kagiso Asset Management said on Thursday.

It rose by 1.1 points to 51.6.

"November was the fourth consecutive month of gains for the PMI, but the index remains below the level of 54.2 reached before the widespread factory sector strikes in July," said Abdul Davids, the head of research at Kagiso Asset Management.

The local PMI number beat consensus expectations of a contraction below 50 and also bucked the international trend of weaker PMI data. Despite a more upbeat overall PMI number, purchasing managers reported increased concern about future prospects.

Davids said the uncertain outlook was reflected in the expected business conditions index, which declined by 7.4 points to 55, the lowest level since August 2011.

The less upbeat prospects were corroborated by the PMI leading indicator - the ratio between new sales orders and inventories - that declined to 0.94 from 1.01 during October.

The new sales orders index, which at 30% had the largest weighting of the key PMI sub-components, eased marginally by 0.4 points to 51.2, while the inventory index was the biggest gainer, rising 3.3 points to reach 54.4.

Davids said this may suggest purchasing managers expected demand to be somewhat stronger than it turned out to be.

The business activity index, meanwhile, rose 1.4 points to 52.3.

The index averaged 51.6 during October and November versus 46.1 in the third quarter, which suggested improved actual factory output in the final three months of the year.
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