Global Courant 2023-05-04 12:17:15
The Absa Purchase Managers’ Index (PMI) rose from 48.1 in March to 94.8 index points in April 2023. Even with the surge in the purchase price index, load shedding still poses a threat with mitigation costs, such as powering diesel generators with the energy crisis the sector experienced another tough month at the start of the second quarter and demand remained under pressure .
With the tax removed, input prices are unlikely to fall, but with the rapid increase in annual costs faced by producers up to 2022, things will become much less intense in the rest of 2023.
Despite the improvement, the index failed to break above the 50-point neutral mark as business activity and new sales orders took a turn for the worse in March.
The inventory index shot to its highest level since mid-2022 in April. While we would caution against reading too much into a single month’s movement, the rapid rise in inventory levels of materials and goods used in the manufacturing process could cause could be due to improved deliveries of goods due to better functioning supply chains (those with the recent movement in the supplier supply PMI index). In addition, or perhaps alternatively, weaker demand for end products or disruptions in the production process (due to load shedding) could have led to higher inventories of input products. Indeed, business activity (output) fell to 47.6 index points in April. In terms of demand, new sales orders fell more than production, reaching the worst level since September 2022. The index fell from 48.5 in March to 44.3 in March.
Looking ahead, purchasing managers now see only a marginal improvement in future business conditions. The index, which tracks expected business conditions over six months, fell from 55.5 to 51 in April. Expectations of a harsh winter ahead for divestments and uncertainty about the strength of global demand, while the manufacturing sector is under pressure in Europe’s major trading partners, likely weighed on expectations.
