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Send  Print  Share  RSS  Twitter  01 Mar 2010

Kagiso SA PMI hits 3-yr high of 60.4 in Feb from 53.6

pmi Johannesburg, March 1 (I-Net Bridge) - The seasonally adjusted Kagiso PMI hit a three-year high in February, jumping to 60.4 index points from 53.6 in January.
This is the highest level since March 2007 and represents the seventh straight month of growth. It is also the fourth consecutive month that the index has remained above the key 50 index point mark that divides manufacturing expansion from contraction, according to Andre Coetzee, Head Fixed Income Kagiso Securities.
The continued upward trend of the index during the first two months of 2010 points to faster growth in actual factory production at the start of the year, suggesting that manufacturing in all likelihood remained the key sector driving the overall growth recovery in 2010Q1.
"Manufacturing was crucial in moving South Africa out of recession in 2009Q3 and with a positive contribution of 1.5 percentage points was also the most important sector responsible for the strengthening of GDP growth to 3.2% q-o-q (annualised) during 2009Q4," said Coetzee.
After initially lagging the global factory rebound, the SA PMI is now on par and may even surpass its global counterpart (which measured 56.1 during January 2010) in February for the first time since early 2009.
With the exception of suppliers` performance, all the other key sub-components that make up the PMI posted gains in February. The biggest increases were seen for new sales orders (+13.2 points) and business activity (+9), which both reached highs not seen since early 2007 when the economy was booming with 5%+ GDP growth and solid employment gains.
Coetzee noted that, "Both in SA and on the international front, concerns have been raised about the sustainability of the factory sector rebound if it is not accompanied by a return to growth of final demand. The sharp gain in new sales orders hopefully indicates that SA consumer spending moved back into growth territory during the first quarter of 2010."
Purchasing managers also reported higher inventories with the index up almost 7 index points to 58.7. The index is now back at the level reached at the peak of the previous business cycle upswing at the end of 2007.
After easing slightly to 52.8 during January, the PMI price index rose strongly to reach 61.9 in February. The index level suggests that a further acceleration from January`s 2.7% y-o-y print for Stats SA`s producer price index can be expected during February.
"A welcome development is that the seasonally adjusted employment index remained above 50 for the second consecutive month in February. The index increased for the sixth month in a row to reach 52.1 points the first time since late 2007/early 2008 that the index has remained above the 50 mark for two or more consecutive months," Coetzee concluded.
I-Net Bridge, Tel: +27-11-280 -0735,
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