PMI jumps on new sales orders

Johannesburg – The seasonally adjusted ABSA Purchasing Managers’ Index (PMI) rose to 50.9 points in April on the back of new sales orders, after dipping below the 50-point mark in March, the bank said on Wednesday.

"The index rose by 4 points to reach 50.9 index points in April," said Absa.

The PMI, which gauges manufacturing activity, in March fell below the 50-point mark that separates expansion from contraction. 

ABSA commented: "This is more or less in line with the level recorded in February and above the average recorded during the first three months of the year."

New sales orders increased from 44.5 points in March to 56.5 points in April.

The index, which is compiled by the Bureau for Economic Research, indicated that the purchasing price index rose by 6.2 points to reach 66.9 in April, after a slight uptick in March.

• READ: PMI dips back below 50 after encouraging start to year

“The rise is likely driven by the weaker rand exchange rate as well as a higher Brent crude oil price compared to the previous month (on average).”

According to the bank, these factors also resulted in the hefty fuel price hike effective from May 1 after fuel prices also increased sharply at the start of April, mainly on the back of fuel levy hikes.   

The business activity index increased from 46 to 49.1 in April, while the employment index rose to 49.5.

"If demand holds up in coming months, activity should follow the new sales orders index into positive terrain," said ABSA.