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SA factory orders edge up

Johannesburg - South Africa’s purchasing managers’ index (PMI) edged up to 50.7 in September from 46.7 in August, the second consecutive monthly rise and pushing above contractionary territory for the first time since June, sponsor Kagiso Securities said on Monday.

“While a key short-term domestic constraint to production is now out of the way, soft global demand should ensure that the... PMI remains relatively depressed in the foreseeable future,“ said Abdul Davids, head of research at Kagiso Asset Management.

This was borne out by the fact that the ratio between new sales orders and inventories remained at an early-2009 low of 0.85 in September, showing the level of inventory in the manufacturing sector is currently too high in relation to the demand for factory goods.

SA's PMI was in line with that of China, its biggest trade partner on country terms, but more optimistic than that of the eurozone, its largest trading bloc.

China improves

The HSBC Purchasing Managers’ Index for China’s services sector rose to 53.0 in September, recovering from an all-time low of 50.6 in August, lifted by new orders.
 
The figures were scheduled for release later in the week but were published on Monday on the website of Markit, which compiles the data.

“September’s HSBC Services PMI rebounded meaningfully, pointing to a possible bottoming out of the services economy towards the end of the year,” said Hongbin Qu, HSBC’s chief China economist.

A survey reading above 50 indicates expansion; below 50 denoates contraction.

The eurozone’s manufacturing contraction deepened in September, as new orders shrank at their fastest pace since June 2009.
 
While Europe’s leaders have so far managed to prevent the eurozone debt crisis triggering a financial catastrophe, Markit’s Eurozone Manufacturing PMI points to worsening economic fortunes across the bloc.
 
The index, which gauges changes in the activity of thousands of factories in the eurozone, fell to a final reading of 48.5 in September from 49.0 in August. It was revised up slightly from a preliminary reading of 48.4.
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