The Absa Manufacturing Purchasing Manager Index (PMI) – a measure of sentiment in the manufacturing sector continued to improve in September. It recorded 58.3 points following 57.3 points in the previous month.
The business activity sub-index, that is consisted with manufacturing output and accounting for 5% of the index, moderated to 63.8 points in September from 67 points in the previous month. This marks the fourth consecutive month that this index recorded above the 50-neutral point.
New sales orders, accounting for 20% in the headline index, also moderated to 70.5 points from 71.1 in the previous month. In the same vein, suppliers’ performance, with the highest weight of 40% in the headline index, moderated to 60.9 points from 61.9 points.
The employment and inventories sub-indices - accounting for 20% and 15% of the headline index, improved on the month and were largely responsible for the marginal increase in the overall index. Employment index rose by 5.5 points to 44.5 point from 39 points while the inventories sub-index improved from 47.6 points to 51.8 points.
More importantly, the expected business conditions in six months’ time from now, not part of the headline PMI, improved further to 64.5 points from 63.4 points previously, which is encouraging but caution need to be exercised as survey based indicators tend to be driven by events taking place around the period during which the survey is done.
All said and done, feeling good is always better than not feeling good but what is important is translating the good feeling into doing something positive. In this case, I hope we will see the manufacturing sector improving, however, like the rest of the economy, it still faces uncertainty from such known things as energy and the pace of the recovery in consumer demand and external demand.