Manufacturing 'driving SA recovery'
2 March 2010
The seasonally adjusted Kagiso Purchasing Managers Index, which measures manufacturing activity in South Africa, rose strongly to 60.4 index points in February, Kagiso said on Monday.
This was the highest level since March 2007 and the fourth consecutive month that the index remained above the key 50 index point mark that divided manufacturing expansion from contraction, Kagiso added in a statement.
"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 the first quarter of 2010," Kagiso's Andre Coetzee said.
"Manufacturing was crucial in moving SA out of recession in the third quarter of 2009, 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% quarter-on-quarter (annualised) during the fourth quarter of 2009," he added.
After initially lagging the global factory rebound, the SA PMI was now on par and might even surpass its global counterpart (which measured 56.1 during January 2010) in February for the first time since early 2009.
Coetzee said that with the exception of suppliers' performance, all the other key sub-components that made 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%-plus GDP growth and solid employment gains.
"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," Coetzee said.
He added that purchasing managers had also reported higher inventories with the index up almost seven 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," Coetzee said.
Sapa
