The SA Daily
05 April 2018
PMI likely to improve
- Today, the economy-wide Standard Bank PMI for SA is due at 09:15. The PMI had lagged EM peers in the private sector in H2:17 owing to the prolonged deterioration of business confidence and conditions in SA — such as political and policy uncertainty, a deteriorating fiscus, and the risk of sovereign ratings downgrades.
- This year, though, the PMI has scaled 50-pts, to 51.4 pts in February, due to the much improved political backdrop and policy reform. Our view is that the PMI should continue to improve in 2018 partly due to the more stable political backdrop and the recent decision by Moody’s to maintain SA’s investment grade rating and change the negative outlook to stable.
- However, there are some downside risks such as land expropriation and a looming global trade war – which could hamper business confidence as well as domestic manufacturing activity. Furthermore, sustained rand strength too could weigh on economic activity via reducing the competitiveness of SA goods.
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