Absa PMI surge suggests good performance in manufacturing sector

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The Absa Purchasing Managers’ Index (PMI) rose by three-points in February, which suggests that the manufacturing sector continued to fare well during the second month of the year.

The PMI rose to 58.6 index points in February 2022, from 50.1 index points in January.

The increase was largely driven by a rise in new sales orders and production volumes due to improvements in the export market.

ABSA notes that purchasing managers remained upbeat about expected business conditions in six months’ time.

ABSA Economist Miyelani Maluleke says while it is encouraging that the employment sub-index of the February PMI survey was edging back up above 50 points, there are some underlying risks.

“We also saw the employment sub-index go into expansionary territory in February. It’s a very encouraging sign but I think it’s still too early to be confident that this signals a sustained rebound in manufacturing jobs. We’ll have to see over the coming months if this positive development is sustained. Thirdly, we are continuing to see strong cost pressures in the manufacturing sector and we remain concerned about the risk that this may be passed on to consumers,” says Maluleke.