September PMI climbs above 50-index points

Analysis.jpgThe seasonally adjusted Kagiso purchasing managers index (PMI) recorded a second consecutive monthly increase during September, gaining four points to move back above the key 50-index point mark to 50.7, the Kagiso website reports.

The PMI recovery in September was against the global trend with initial indications that the eurozone PMI declined further below 50 to 48.5 last month – the second consecutive month that eurozone manufacturing has shrunk, said Kagiso Asset Management head of research Abdul Davids.

The South African business activity index posted the biggest rise of almost seven index points to 53.4 and has now recovered almost all the losses experienced in July, when it plunged by more than 19 index points.

With the exception of the employment index, which remained stuck at depressed levels, most of the other PMI subcomponents also painted a more optimistic picture relative to the previous two months. New sales orders rose by 4.3 points, but at 48.9 remained below the 50 mark, while purchasing commitments, back above 50 and expected business conditions, back above 60 index points, also increased.

The PMI is an indicator of the economic health of the manufacturing sector. A reading below 50 indicates contraction, while a reading above indicates expansion.

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