Resurgence in PMI has hollow ring

The PMI is a critical measure of manufacturing activity in South Africa. According to Brait economist Colen Garrow, the value of the Kagiso PMI was that it came in one month ahead of similar data released by Statistics SA.

"With the exception of the employment index, which remained stuck at very depressed levels," Davids said, the domestic PMI was boosted last month by a surge in the business activity index, which, "posted the biggest rise of almost 7 points to 53.4, recovering almost all of the losses experienced in July when it plunged by more than 19 points." Davids noted that even though the Kagiso PMI rebounded last month "gaining 4 points to move back above the key 50 index point mark to reach 50.7...the PMI recovery in September is against the global trend."

Earlier, Stats SA reported that manufacturing volumes contracted by 7% in the second quarter. Garrow believes that the Stats SA numbers due next week would confirm weakness in the sector in the third quarter and Davids warns that "soft global demand" would keep the domestic PMI "relatively depressed in the foreseeable future".

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