HSBC has launched a “whole economy” Purchasing Managers’ Index™ for South Africa as it broadens its coverage of emerging markets. 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 PMI™, which is produced by Markit on behalf of HSBC, has been conducted in South Africa since July 2011. This is the first time it has been made publicly available. The index will be published monthly from now on.
Andrew Dell, Chief Executive Officer, HSBC Africa, said: “The South Africa PMI™ will be among the first indicators of local economic conditions, helping inform financial markets, economists, analysts and local policymakers.”
The HSBC South Africa PMI™ marks our commitment to a market we believe is going to become increasingly important in terms of global trade and capital flows
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.
Mr Dell said: “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.”
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.
David Faulkner, Economist for South Africa and sub-Saharan Africa, HSBC, said: “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.
“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.”
The intellectual property rights to the HSBC South Africa PMI™ provided herein is owned by Markit Economics Limited. Any unauthorised use, including but not limited to copying, distributing, transmitting or otherwise of any data appearing is not permitted without Markit’s prior consent. Markit shall not have any liability, duty or obligation for or relating to the content or information (“data”) contained herein, any errors, inaccuracies, omissions or delays in the data, or for any actions taken in reliance thereon. In no event shall Markit be liable for any special, incidental, or consequential damages, arising out of the use of the data. Purchasing Managers' Index™ and PMI™ are trade marks of Markit Economics Limited, HSBC use the above marks under license. Markit and the Markit logo are registered trade marks of Markit Group Limited.
The HSBC South Africa PMI™ is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the South African economy, including manufacturing, mining, services, construction and retail. The Purchasing Managers’ Index™ (PMI™) is a composite index based on five of the individual indexes with the following weights: New Orders - 0.3, Output - 0.25, Employment - 0.2, Suppliers’ Delivery Times - 0.15, Stock of Items Purchased - 0.1, with the Delivery Times index inverted so that it moves in a comparable direction.