Manufacturing production came out stronger than expected in February, which augurs well for first quarter gross domestic product growth. The seasonally adjusted Kagiso Purchasing Managers’ index put in a strong performance in March, suggesting February’s buoyancy in manufacturing production continued into that month.
GOOD PERFORMANCE Manufacturing production put in a good performance in February, rising by a whopping 2,3% month-on-month, which took the year-on-year growth to 6% from a moderate 1,6% growth rate in January. Nedbank says the sector benefited from firmer domestic demand and the global recovery. Overall, nine out of the 10 sectors recorded growth on an annual basis. The strongest contribution came from the automotive sector.
TRACKING THE PMI The graph shows how manufacturing output tracks the Kagiso Purchasing Managers’ index, which is a survey of purchasing managers in the industry and regarded as a leading indicator for the manufacturing industry. The PMI index rose to 57,2 in March on a seasonally adjusted basis, the highest level since February 2010, accelerating from 54,8 in February. A level above 50 indicates expansion.
CAPACITY UTILISATION RISES The utilisation of production capacity by large manufacturers was 81,6% in November 2010 (the latest available figure) against 79,9% in November 2009. Capacity utilisation dwindled during the recession, leading to a fall-off in fixed investment spending as manufacturers sat with excess capacity. Predictions are that manufacturers will add to capacity and replace obsolete capacity this year.
CAPEX TO RISE Fixed investment (capital expenditure, or capex) in the manufacturing sector has been weak. Overall, fixed investment by the private sector rose a paltry 1,6% in fourth quarter 2010 and fell 4,4% over the year as a whole. Nedbank notes business confidence has increased strongly over the first quarter of this year, suggesting some organisations may consider starting capital investment programmes.
GOOD PERFORMANCE Manufacturing production put in a good performance in February, rising by a whopping 2,3% month-on-month, which took the year-on-year growth to 6% from a moderate 1,6% growth rate in January. Nedbank says the sector benefited from firmer domestic demand and the global recovery. Overall, nine out of the 10 sectors recorded growth on an annual basis. The strongest contribution came from the automotive sector.
TRACKING THE PMI The graph shows how manufacturing output tracks the Kagiso Purchasing Managers’ index, which is a survey of purchasing managers in the industry and regarded as a leading indicator for the manufacturing industry. The PMI index rose to 57,2 in March on a seasonally adjusted basis, the highest level since February 2010, accelerating from 54,8 in February. A level above 50 indicates expansion.
CAPACITY UTILISATION RISES The utilisation of production capacity by large manufacturers was 81,6% in November 2010 (the latest available figure) against 79,9% in November 2009. Capacity utilisation dwindled during the recession, leading to a fall-off in fixed investment spending as manufacturers sat with excess capacity. Predictions are that manufacturers will add to capacity and replace obsolete capacity this year.
CAPEX TO RISE Fixed investment (capital expenditure, or capex) in the manufacturing sector has been weak. Overall, fixed investment by the private sector rose a paltry 1,6% in fourth quarter 2010 and fell 4,4% over the year as a whole. Nedbank notes business confidence has increased strongly over the first quarter of this year, suggesting some organisations may consider starting capital investment programmes.