Absa Purchasing Managers’ Index December 2021

Published by the Bureau for Economic Research, University of Stellenbosch

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) lost some momentum in December 2021 but remained in expansionary territory. The headline index declined by 3.1 points to 54.1. Excluding inventories, all the major subcomponents of the PMI were lower in December. The business activity index lost 5 points to just below the key 50 mark. Despite this, at 49.5 in 2021Q4, the index averaged well above the weak level of 43.1 recorded in the third quarter. Even so, the Q4 average was still notably lower than the average of almost 57 points recorded in the second quarter of 2021. This suggests that while actual manufacturing production should post quarterly growth in 2021Q4, the level of output is likely to remain below where it was in the second quarter.

The new sales orders index was lower at 51.7 in December. Of interest here was a large (more than 10 points) decline in the export index. While it is not clear what drove the notable export easing, slower services sector activity in the Eurozone amid a surge in COVID-19 infections and an associated tightening in lockdown restriction in several countries at the end of 2021 may have contributed. There were a few other noteworthy moves in the key PMI subcomponents during December, all of them negative. The employment index recorded a significant decline of more than 8 points to well below the neutral 50 level. Although we would caution not to read too much into a single month’s print, the employment dynamics need to be watched. The weakness in the employment indicator could be seen against the backdrop of reduced optimism about future business conditions. The index measuring expected business conditions declined for the third month in a row (to 53.1).

The news on the input cost front was also not encouraging, with the purchasing price index rising further to reach the highest level since early in 2016. Amongst other factors, the combination of weak employment dynamics and fast rising input costs complicates upcoming domestic monetary policy decisions.

For further information: Hugo Pienaar, Chief Economist, BER (Tel: 021 808 9782)
The PMI is an economic activity index based on a survey conducted by the Bureau for Economic Research (BER) and sponsored by Absa. Although reasonable professional skill, care and diligence are exercised to record and interpret all information correctly, Stellenbosch University, its division BER, the author(s)/editor and Absa (inclusive of its affiliates and/or subsidiaries) do not accept any liability for any direct or indirect loss whatsoever that might result from unintentional inaccurate data and interpretations provided by the BER, as well as any interpretations by third parties. Stellenbosch University and Absa further accept no liability for the consequences of any decisions or actions taken by any third party on the basis of information provided in this publication. The views, conclusions or opinions contained in this publication are those of the BER and do not necessarily reflect those of Stellenbosch University or Absa. Absa is an authorised financial services provider and registered credit provider reg no NCRCP7.