(Bloomberg) –The jump to a three-year high in a gauge measuring sentiment in South Africa’s manufacturing industry may not be sustainable.
The subindex for new-sales orders rose above 50 for the first time since December and the one for purchasing inventories the first time since January, boosting the overall PMI. These levels may not be sustained as it was likely driven by increased output by manufacturers to safeguard against potential strike-related disruptions in the automotive or platinum-mining industries, where wage negotiations are taking place, Absa said.
While four of the five major sub-components registered were above 50, the lender said it’s unclear whether the improvement can be sustained because of concerns about the health of manufacturing globally. The index measuring expected business conditions in six months’ time declined to 54.5, the lowest level of the year, yet still positive.