Local Business activity grows at fastest rate in 21 months in Sept – PMI

OCTOBER 6, 2014

South African business activity expanded at the fastest rate in 21 months in September as new orders rose, a survey showed on Friday.

The HSBC Purchasing Managers' Index (PMI) rose to a 52.6 in September from 51.1 in August, improving for the third straight month.

HSBC said business activity rose at its sharpest pace since December 2012, with companies seeing increased order intakes and improving conditions in the mining sector after a five-month strike in the platinum belt.

"Demand indicators led the improvement, with marked increases in output and new orders, while companies rebuilt inventories in anticipation of recovering demand," said David Faulkner, an economist at HSBC.

Cost pressures remained high, with both purchase prices and staff costs climbing sharply, the latter unlikely to abate after a 280 000 member public servants union called for a 15% wage hike on Wednesday.

"Wage inflation as shown by staff costs sub-index rose to an all-time high in September, illustrating the cost pressures associated with recent high wage settlements," Faulkner added.