Engineering News 2004/05/04

South Africa's Investec Purchasing Managers Index (PMI) fell marginally in April, but the recovery in the manufacturing sector remained on course, sponsors Investec said yesterday.

The PMI retreated to 56,2 points, after rising to 57,9 in March, its highest level since the first half of 2002. Investec attributed the decline to the fact that the April period had many holidays.

"The reading is broadly consistent with the accelerated pace of manufacturing activity reported in March," said Andre Roux, head of fixed income at Investec Asset Management.

"The small decline is probably largely reflective of a slowdown in production due to the additional election-related public holidays in April."

The PMI survey is carried out monthly by the Stellenbosch University-based Bureau for Economic Research, in conjunction with the Institute of Purchasing and Supply South Africa.

A reading above 50 in the monthly survey of purchasing managers in the South African manufacturing industry signals expansion, while a reading below 50 means contraction.

Investec said new sales orders remained firm and factory employment increased sharply, while the production and inventories indices declined in April.

The employment index surged to 54,6 points in April, from March's 49,4. It followed a similar bounce in February and suggested that last year's deteriorating trend in factory employment was reversing, Roux said.

"Manufacturers are clearly benefiting from robust domestic demand and seem to have had enough time to adjust to import competition aggravated by the strong rand," he said.