MEDIA & NEWS | 1 DECEMBER 2019

Supplier deliveries index improves amid continuing slump

Absa-CIB-Author

Absa CIB Admin

SHARE

Absa Purchasing Managers’ Index declines from last month as four of the five sub-components of the headline PMI nudge down.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) ticked down to 47.7 index points in November from 48.1 in October. The decline was broad-based as four of the five subcomponents of the headline PMI nudged down when compared with the previous month.

Despite the decline, the average level of the PMI in October and November is still slightly above that recorded in the third quarter.

Worryingly, business activity slumped further in November.

The index fell by 6.2 points to a multi-year low of 39.4 in November. According to Stats SA, quarterly manufacturing production contracted in the third quarter of 2019. The weak readings on the business activity index seen in the fourth quarter so far argue against a strong, if any, recovery in manufacturing output.

New sales orders and export demand fall

Demand remained under pressure with the new sales orders index not being able to hold on to all of last month’s gains. Respondents saw a decline in export demand during the month.

The only major subcomponent to record an improvement compared to the previous month was purchasing inventories, which picked up from a ten-year low reached in October.

Notwithstanding the increase, the index remained well below the neutral 50-point mark. The only subcomponent to come in above 50, which generally points to improving conditions, was the supplier deliveries index.

On a more positive note, respondents turned slightly less pessimistic about the near-term future. The index tracking expected business conditions in six months’ time increased to 47.4 index points in November after recording five consecutive declines.

Nonetheless, despite the uptick, the latest reading means that conditions are still expected to worsen in six months’ time, albeit less so than before.

Finally, the purchasing price index fell by a further 5.7 points after a 7.7-point decline was recorded last month.

The sharp declines point to a significant moderation in cost increases. Indeed, the index fell to the lowest level since early 2018.

Absa-CIB-Author
Absa CIB Admin

Related Articles

COVID-19 Risk Management

How a global crisis impacts your risk management decisions

Medium to long-term sustainability will depend on the ability of businesses to manage volatile currencies and supply chain disruptions.

TRADE INSIGHTS

Key enablers for trade and business across the African continent

The digitisation of supply chains and payment methods are key to facilitating trade across Africa.

Commercial Property Insights

A property development financing approach that delivers on promises in Africa

Does development funding in the African property development market offer more risk or reward?

TRADE INSIGHTS

New trade agreement could contribute $70 billion to Africa’s GDP

The African Free Trade Agreement is a significant step towards growing trade and diversifying global exports.