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Output stabilises, ends 15-month period of decline

Sep 05 2016 10:50

Cape Town – The Standard Bank Purchasing Managers' Index (PMI), compiled by Markit, fell marginally in August to 49.8, from July’s 49.9. Fifty is the mark that separates expansion from contraction.

The latest figures show that output is stabilising and new orders are rising marginally amid an increase in new order intakes, while companies continued to slightly raise their workforce numbers, Markit said in a statement.

Selling prices rose somewhat since mid-2014 as some firms reduced their charges in an attempt to remain competitive.

The latest survey results reflected broadly stable operating conditions in the private sector.

The PMI figures contain the latest release of data collected from the a monthly survey of business conditions in the South African private sector.

The PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.

New orders and employment contributed positively to the headline PMI in August, but growth rates in these cases were only marginal.

Total new business was weighed down by the sharpest decline in foreign sales since last November. The latest output figures, however, end a 15-month period of contraction.

Despite the slight increase in new business, companies remain cautious about purchasing activity, as the most recent data showed a decline in the number of items bought.

Input prices rose at the slowest pace since March 2015, as companies reported weaker purchase price inflation and only a moderate rise in average staff costs.

Although some companies passed higher input costs on to their clients, selling prices rose to the weakest extent in just over two years, due to increased competition, according to some panellists.

Meanwhile, suppliers’ delivery times improved significantly – the most since the PMI survey has been conducted since 2011. The improvement is attributed to subdued demand and better outputs. 

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standard bank  |  manufacturing  |  pmi  |  sa economy
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