PMI rebounds in April
THE SEASONALLY adjusted Absa Purchasing Managers’ Index (PMI) rose back to 51.5 index points this month as business conditions improved after slumping to 44.7 points in April. The April survey was the first data point available after the controversial cabinet reshuffle late in March and subsequent credit rating downgrades in April, Absa said.
“The rebound in May suggests that, as expected, April’s deterioration was driven by a souring of sentiment,” it said.
“The current level of 51.5 points is likely a better reflection of conditions on the factory floor than the dismal 44.7 points recorded in April. Nonetheless, without any official manufacturing data for the second quarter available as yet, and elevated volatility in the recent PMI data, it is too early to call whether the sector performed better in the second quarter compared to the first.”
Investec economist Kamilla Kaplan said looking ahead, a synchronised upturn in global economic activity and higher global trade momentum should lend support to local export orientated manufacturers. Domestic demand should strengthen somewhat, with improved market conditions in the allied agriculture and mining industries respectively, dissipating drought effects and higher commodity prices.
Seifsa senior economist Tafadzwa Chibanguza said the fact that the index had rebound to an expansionary level of above 50 points was a good indication of a return to the expected level of manufacturing in the economy. – Staff Reporter
Manufacturing sector expansion is promising.