The FINANCIAL — HSBC has launched a “whole economy” Purchasing Managers’ Index™ for South Africa as it broadens its coverage of emerging markets, according to HSBC Group.
The PMI™ survey, which covers the manufacturing, services, construction, mining and retail sectors, shows an improvement in operating conditions in the country during October. The index rose to 51.5 last month, from 49.8 in September.
“The South Africa PMI™ will be among the first indicators of local economic conditions, helping inform financial markets, economists, analysts and local policymakers,” said Andrew Dell, Chief Executive Officer, HSBC Africa.
HSBC, which sponsors 17 PMI™ surveys in emerging markets, suggests that the rebalancing of the global economy from the developed world to emerging markets will continue, according to HSBC Group.
“The HSBC South Africa PMI™ adds a sub-Saharan Africa dimension to our coverage and marks our commitment to a market we believe is going to become increasingly important in terms of global trade and capital flows,” Mr Dell said.
The South Africa PMI™ is based on data compiled from a monthly questionnaire sent to purchasing managers in around 400 private sector companies. A reading above 50 suggests an improvement in business conditions on the previous month, while a reading below 50 signals deterioration.
The rise to 51.5 in October signalled the strongest improvement in operating conditions in 2013 so far, after a contraction in September.
New orders rose, with the rate of growth in new work the quickest since May. Anecdotal evidence suggested that improving market conditions and stronger consumer confidence contributed to the rise in new business. However, respondents reported that unfavourable exchange rates and difficulties in European markets led to a decline in export sales, according to HSBC Group.
“The HSBC South Africa PMI™ suggests an improvement in private sector conditions in October as the economy rebounded from a strike-affected September. A robust pick-up in new orders and a small rise in output explain most of the improvement while employment levels expanded marginally in line with positive but weak growth," said David Faulkner, Economist for South Africa and sub-Saharan Africa, HSBC.
“The improvement in economic conditions appears to be domestically driven. New export orders contracted in October, suggesting that weak external demand and underlying competitiveness challenges continue to restrain exports. Some respondents also linked weaker exports to the recent rebound in the rand in October, which may have shaved off part of the competitiveness gains from earlier depreciation,” he added.
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