“The level of the South African manufacturing PMI is in sharp contrast to the developed economies. In the United States, the ISM manufacturing index rose to 54.9 index points from 53.7 previously, while the Eurozone manufacturing PMI stood at 53.4 in April - signalling expansion for 10 straight months,” Andre Coetzee, Managing Director of CIPS Africa, said in a statement.
According to Kagiso, April’s drop was the lowest since July 2011. The New Sales Orders Index declined 3.1 points to 43.5 index points, below the neutral 50-point mark as it was last month. There was however a sharp decline in the Price Index to 79.3 index points from 93.0 index points in March.
“While the decline was somewhat sharper than expected, the slight drop in the diesel price in April, as well as the slightly stronger rand exchange rate, likely contributed to the moderation in the rate of increase in input prices,” Coetzee explained.
(READ MORE: S.Africa's PMI unchanged at 49.9 in January)
The Business Activity Index dipped back below 50 index points after nudging above the neutral 50-point mark in March, declining by 2.5 index points to 48.5 index points in April. The Business Activity Index in particular, according to Coetzee, has signalled a slowdown in production since December 2013.
The Employment Index declined 7.2 index points to 44.6 index points, which was the lowest level since April last year, as well as in line with lower activity levels. Similarly, the Inventories Index had a slight decline to 52.5 index points.
Despite index measuring Expected Business Conditions in six months’ time remained largely unchanged at 54.2 index points, the PMI Leading Indicator, which is the ratio between new sales orders and inventories, fell further to a level below one.
This, according to Coetzee, implies that inventories were relatively high compared to the demand for manufactured goods, which normally does not bode well for production going forward.
The Suppliers’ Performance Index however edged up to 53.9 index points in April from 52.5 index points in the previous month.