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Manufacturing PMI returns to positive territory in February but prices are a problem



Although economic activity as measured by the PMI is picking up, demand remains weak while prices continue to increase.

South Africa’s manufacturing PMI returned to positive territory in February, increasing sharply after an extraordinarily steep drop in January, especially since there were no major events that could have caused such an outsized decline.

According to the monthly Purchasing Managers’ Index (PMI), South Africa’s seasonally adjusted PMI increased from 43.6 in January to 51.7 points in February, after falling unexpectedly at the start of the year from 50.9 in December.

The PMI is an economic activity index based on a monthly survey conducted among a representative group of purchasing managers in South Africa’s manufacturing sector by the Bureau for Economic Research (BER) and sponsored by Absa. These purchasing managers indicate each month whether a particular activity, such as new sales orders, for their companies increased, decreased or remained unchanged.

However, Jee-A van der Linde, senior economist at Oxford Economics Africa, points out that only suppliers’ performance was above the neutral 50 point mark of the five subcomponents of the PMI.

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