SA PMI shows modest increase
Source: http://www.investmentpostcards.com/2009/06/02/sa-pmi-shows-modest-increase/Posted on Tuesday, June 2nd, 2009 | In Market Commentary, South Africa
By André Coetzee, Kagiso Securities.
The seasonally adjusted Kagiso PMI improved slightly in May, posting an increase to 37.3 index points œ the first rise since January 2009. The average PMI for the first two months of 2009Q2 is 36.5 versus a Q1 average of 38.6.
Steady increases (albeit from very depressed levels) in the output volume and new sales orders indices over the past two months suggest that the decline in manufacturing output may be stabilizing from the sharp falls posted earlier this year œ the seasonally adjusted business activity and new sales orders indices rose to 35.1 and 35.7 respectively.
Indicators of capacity utilization and near-term demand also improved somewhat from April’s record lows, but current levels indicate that activity in the manufacturing sector is still contracting, albeit at a more moderate rate. The seasonally adjusted inventories index increased to 35.4 points but the purchasing commitments index failed to respond, staying almost constant at a very low 29.6 points.
On a more upbeat note, the PMI price index dropped below 50 (to 45.6) for the first time since 2004, raising the prospect that producer price inflation (as measured by Stats SA) could move into deflationary territory in the foreseeable future. Meanwhile, for the first time since September 2008 a majority of purchasing managers expect business conditions to improve in 6 months’ time.
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 About Prieur du Plessis (http://www.investmentpostcards.com)
Prieur du Plessis has 25 years’ experience in professional investment research and portfolio management. More than 1,000 of his articles on investment-related topics have been published in various regular newspaper, journal and Internet columns. He has also published a book, Financial Basics: Investment. Prieur is chief executive and principal shareholder of South African-based Plexus Asset Management, which he founded in 1995. The group conducts investment management, investment consulting, private equity and real estate activities in South Africa and other African countries. Plexus is the South African partner of John Mauldin, author of the Thoughts from the Frontline e-letter, and also has an exclusive licensing agreement with California-based Research Affiliates for managing and distributing its enhanced Fundamental IndexTM methodology in the Pan-African area. Prieur is 52 years old and lives with his wife, television producer and presenter Isabel Verwey, and two children in Cape Town, South Africa. His recreational activities include long-distance running, motor cycling, traveling and reading. |
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