PMI up, but jobs outlook still gloomy

Jobs

Absa announced today that its seasonally-adjusted Purchasing Managers’ Index (PMI) rose by 0.9 index points to 44.9 in September 2017 – a small gain.

Despite this second monthly improvement, it warned that “the index remained well below the neutral 50-point mark for a fourth month.

“Encouragingly, the rise was well supported by the key subcomponents, with four out of five increasing compared to August.”

Of the main subcomponents, the new sales orders index registered the biggest increase in September, rising by 3.1 points to 43.2.

While domestic demand conditions likely remained tough, some respondents noted an improvement in exports after a dip in August.

On the back of the uptick in demand, the business activity index also rose in September. The index increased for a second month, up to 42.8 index points from 41.3 in August.

However, the sting in the tail is that even with the rise in the output index, the employment index fell back to July’s level of 44.1 index points.

On a positive note, respondents were more optimistic about future business conditions.

The PMI is a good gauge of manufacturing sentiment, and the latest numbers suggest the economy is still limping along.

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