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Definition

An economic indicator which shows the health or otherwise of the manufacturing sector. This index is produced monthly and published in the financial press. It is obtained from a monthly survey of 300 purchasing managers in the private sector. Information is gathered under five headings: employment, supplier deliveries, production, inventory levels and new orders. Together these figures are combined into an economic index. If the index is above 50 it indicates growth in the sector and vice versa. Obviously, manufacturing sales are ultimately derived from consumer demand for products and restocking by the retail sector. This in turn drives employment in manufacturing and comprises a significant element of Gross Domestic Product growth. A good PMI means that shares involved in manufacturing should do well going forward. Of course, there is a significant export element to manufacturing demand so the strength of the rand is a key component. In December 2023 the ABSA purchasing managers index prepared by the Bureau of Economic Research (BER) increased to 50,9 from November's 48,2 indicating a recovery in manufacturing activity in the country. December 2023 was the first month in 8 months that the PMI was above 50.

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