The data, which was provided by Kagiso Tiso Holdings, who sponsor the purchasing managers’ index (PMI) survey, explained that South Africa’s PMI edged below the 50-point mark for the first time since April 2013.
The 49.9 point decline is reportedly at its weakest level in eight months. According to Kagiso Asset Management head of research Abdul Davids, this has now placed the country below its main trading partners.
“Activity in the Eurozone rose at its fastest pace in two and a half years in December and is now comfortably above the key 50-index level,” he says. “In the US, the ISM manufacturing PMI declined somewhat, but at 57, remains at a fairly high level.”
The New Sales Orders Index rose for the third consecutive month to reach 51.8 points, but fourth quarter readings for the particular index remain the lowest for the year.
The Business Activity Index fell 4.7 points to 49.3 in December and the fall, according to Kagiso, suggests a slowdown in production growth.
The Employment Index fell from 50.8 to 45.8 in December. According to Davids, this was expected due to the manufacturing sector’s struggle to create sustained employment since the 2008-2009 recessions.
“Despite the mixed news, purchasing managers remained relatively optimistic about the first half of 2014. While the index measuring expected business conditions in six months’ time declined slightly, at 57.9 points, it remains at a high level,” said the company in a statement.
“This sentiment was also reflected in the PMI leading indicator, which rose above 1 for the first time since August 2013. This indicates that inventories are below expected demand, which generally bodes well for future production in the manufacturing sector.”