The PMI — which reflects the percentage of purchasing managers in an economic sector who reported better business conditions compared with the previous month — stabilised last month, increasing from 54,6 points in January to 54,8 points.
A number above 50 implies that overall sentiment is positive, while a figure below 50 suggests managers have a generally negative outlook.
Last month, the PMI’s employment subindex rose above its key 50- point level into expansionary territory, after nine months of below 50 readings.
Theo Vorster, a specialist consultant at the Kagiso Group, said that the "most heartening trend in the latest numbers is that the PMI employment index rose back above the key 50 mark to 51,6, indicating that the factory sector may have started employing again".
In the fourth quarter of last year, the manufacturing sector increased employment by 70000 jobs.
SA’s overall unemployment rate sits at 24%. The government’s New Growth Path has set a target of creating 5-million jobs in 10 years.
The PMI price index surged by more than 10 points last month to above 80 index points, its highest level since the end of 2008. It suggests manufacturing input costs are accelerating sharply.
These higher costs were unlikely to encourage purchasing managers to employ people, Ilke Smit, economic analyst at Metropolitan Asset Managers, said yesterday.
"With higher prices paid at the manufacturing level while new employees are taken on board, one hopes that retailers further down the supply chain will be able to pay these higher prices by either absorbing some of the price pressure or passing them on to consumers."
But, "given a slow-to-recover labour market and still fairly price- sensitive consumers, the shifting of price increases onto consumers wouldn’t be a viable option for some retailers, especially those selling discretionary items", she said.
The PMI’s subindices measuring new sales orders and business activity were stable. However, managers were not as optimistic about future business conditions.
Source: Business Day
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