Johannesburg, 1 June 2020 – A surprise uptick in overall business activity for May 2020,
as captured by the headline Purchasing Managers’ Index (PMI), despite subdued
economic activity from the lockdown, bodes well for companies in the manufacturing
sector, the Steel and Engineering Industries Federation of Southern Africa (SEIFSA) said
today.
Speaking after the release of the PMI data this morning, SEIFSA Economist Marique
Kruger said the rebound of the PMI into an expansionary zone in May, despite a very
difficult economic environment, provides insight to the eagerness of local purchasing
executives to get back to work and restart production processes.
“Given the difficult economic context, businesses have to remain resilient and rejig local
supply chains. The performance of the PMI is, therefore, encouraging as the lead
indicator plays a vital role in influencing how producers and relevant stakeholders in the
broader manufacturing sector view the month ahead,” Ms Kruger said.
The latest seasonally-adjusted preliminary PMI data show the composite PMI increasing
from the contractionary zone of 46.1 points in April 2020, to the expansionary zone of
50.2 points in May 2020.
Ms Kruger said the positive performance is particularly welcome as most of the sub-
indices performed better in May 2020 compared to April 2020.
It is important for businesses to progressively improve on economic activity in order to
ensure their survival and maintain existing jobs. Accordingly, Ms Kruger said SEIFSA
welcomes South Africa’s move into alert Level 3 from today, which will see a steady
increase in the number of workers going back to work. This is important, especially given
that all manufacturing, mining and construction workers are allowed to return under strict
health protocols.
However, the concern is that many workers in the outlined industrial sectors are reliant
on public transport for their daily commute to work, thereby increasing their exposure to
the coronavirus, with extended implications for their health, their ability to work and
productivity.
Ms Kruger said that in order to further limit unwanted consequences arising from the
COVID-19 pandemic, it is important for policy makers to discuss the implementation of
transport subsidies for struggling businesses, which desperately need their full staff
compliment to produce and sell. Such incentives would invariably contribute towards
improved competitiveness and increased business activity, thereby bringing some level
of normality to local manufacturing businesses in the short to medium term.
Issued by:
Ollie Madlala
Communications Consultant
Tel: (011) 298 9411 / 082 602 1725
Email: ollie@seifsa.co.za
Web: www.seifsa.co.za