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The SA Daily 05 December 2019

November PMIs below par

Shireen Darmalingam

  • The SA industry-wide November PMI, expected at 49.3 pts, after 49.4 pts in October, in fact slid to 48.6 pts, now the lowest since July 2019. The index has dwelled below the 50-pt benchmark for seven consecutive months now. November new orders did manage a small rise to 48.9 pts, after having fallen for 16 months running; this sub-index has been in contraction for 17 months now.
  • In November, the Bureau for Economic Research (BER) manufacturing PMI too slid, to 47.7 pts, from 48.1 pts in October. This November decline was broad-based, with four of the five indices sliding. Disappointingly, the business activity sub-index plummeted by 6.2 pts in November, to 39.4 pts, failing to indicate any kind of manufacturing industry recovery. Only the purchasing inventories sub-index improved in November, and the suppliers’ delivery index was the only one above 50 pts.
  • Indeed, the manufacturing sector contracted by 3.9% q/q in Q3. So, this week’s November PMI outcome bodes ill for this sector’s contribution to Q4 GDP. We forecast GDP growth of just 0.4% for 2019 and 1.0% for 2020 — but only premised on growth-supportive interventions by government. However, underlying economic weakness and poor confidence as well as slack progress with policy reform persist, as does SA’s extremely concerning fiscal prognosis. This situation is also being exacerbated by the risk of a sovereign downgrade next year.

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