Barclays PMI shows manufacturing is slowing

THE PACE of activity in the manufacturing sector moderated last month, according to the Barclays purchasing managers’ index (PMI), and lost ground to 51.9 points from 54.9 in April.

But despite the three-point drop, the headline PMI managed to remain above the neutral 50-point mark for a third consecutive month

Barclays said yesterday: “As indicated last month, the size of the relative increase in the headline PMI in April may have overstated actual production growth.

“The current level is therefore likely to be more indicative of conditions in the sector. The headline figure is more or less in line with the euro zone, a key market for South African manufacturing exports.”

All but one of the major subcomponents of the PMI declined last month compared with April. The new sales orders index saw the biggest decline (minus 6.6 points), but remained above 50.

Barclays said: “While some respondents indicated an improvement in export demand, local demand remained under pressure. New sales orders slowed, the business activity and employment indices followed suit and also declined.”

Sanisha Packirisamy, an economist at MMI Investments and Savings, said: “The PMI continues to signal stress in domestic demand. While export demand appears to have improved in response to a weaker local currency, rising imported input costs and subdued global trade activity are likely to prevent a faster ramp up in manufacturing production.” Barclays said manufacturers were faced with renewed pressure on the cost front. The price index index rose to 80.1 points last month.

JPMorgan’s global manufacturing PMI, produced with Markit, came in at 50.0 points last month, right on the level that separates growth from contraction, compared with 50.1 in April.

Markit’s final manufacturing PMI for the euro zone dipped to a three-month low of 51.5, down marginally from April’s 51.7.