By André Coetzee, Kagiso Securities.

The seasonally adjusted Kagiso PMI rose to 47.6 index points in October from a revised 45.9 during September. Last month’s 1.7 index point gain is on top of a 6.4 point jump in September and confirms that SA manufacturing output is moving back towards expansionary territory.

While  it  is  disappointing  that  the  headline  PMI  was  unable  to  rise  above  the  key  50  level  in  October,  the  sub-indices  paint  a  consistent picture  of  a sector  that  is  emerging  from  a  deep  contraction  with  both  the  business activity  and  new sales orders indices  building  on September’s robust gains to reach the highest levels since April 2008.

Furthermore, the near-term demand indicators hint towards sustained improvement going forward with the backlog of sales orders index also  reaching  the  best  reading  since  2008Q2  and  purchasing commitments rising  to  the neutral  50 level  for the first  time

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By André Coetzee, Kagiso Securities.

After remaining stuck below 40 index points between February and August 2009, the seasonally adjusted Kagiso PMI posted the second biggest monthly increase on record (8.7 points) to reach 48.0 during September. The latest reading is the highest since May 2008 and indicates that SA’s manufacturing sector - after an initial lag - is catching up to the sharp PMI gains witnessed in our major trading partners in the last number of months. The global PMI rose to 53.1 index points during August 2009.

The September SA PMI data is particularly encouraging given signs of life in almost all of the sub-indices. Especially noteworthy is that output volumes did not contract any further: the seasonally adjusted business activity and new sales orders indices rose from very low levels to 49.4 and 50.7 respectively.

Near-term demand indicators also bounced back from their previous

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The seasonally adjusted Kagiso PMI stayed at extremely low levels in July, declining from 37.9 during June to 37.3 index points - the persistent weak readings and the associated contraction in manufacturing output are disappointing especially since the global PMI has already reached levels above 45 index points. An analysis of the apparent divergence between the SA and global PMI is provided at the end of the report.

After moderating in the last number of months, the pace of output volume decline accelerated again as the seasonally adjusted business activity and new sales orders indices dropped from 37.9 to 33.8 and 38.2 to 35.8 respectively. This is the worst of the bad news.

On a less pessimistic note, July saw increases in the backlog of sales orders, the seasonally adjusted inventories index and purchasing commitments. Although these increases are welcome, the levels still indicate contractions in all of the

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by Edward Hugh: Barcelonabr /br /Global manufacturing took another step towards growth in June - but the process was, as ever, uneven. The JPMorgan Global Manufacturing PMI posted 46.9, its highest reading since last August. The current output component even expanded slightly following a year-long period of contraction. The PMI has now remained below the neutral 50.0 mark for thirteen successive months.br /br /The principal factors weighing down on the level of the PMI in June were declines in new orders, employment and inventories. However, rates of contraction in new work and employment eased to their weakest for thirteen and eight months respectively. Looking ahead, the new orders to inventories ratio – which tends to move in advance of the production cycle – rose for the sixth month running to its highest since April 2004. Only 4 PMIs - those for China, India, Turkey and Sweden posted growth readings in ...

The  seasonally  adjusted  Kagiso  PMI  for  June  increased  slightly  for  the  second  consecutive  month  to  37.9  points  from  37.3  during  May, confirming a bottoming out of the index in May.

The slowing in the contraction of output volumes continued with both the seasonally adjusted business activity and seasonally adjusted new sales orders indices increasing from 35.1 and 35.7 to 37.9 and 38.2 points respectively.

May’s  inventory  turnaround  was  not  sustained  œ  the  seasonally  adjusted  inventories index dropped from 35.4 to 29.1. In contrast, purchasing commitments posted a slight increase from 29.6 to 31.1 index points. The erratic behaviour of these indicators may reflect high levels of uncertainty amongst purchasing managers regarding future demand prospects, while the low index levels remain consistent with a contracting manufacturing sector.

In contrast to the weak near-term indicators, a majority of managers still expect  business  conditions  to  improve  in  6  months’  time  œ  the

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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 

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