Auto and Purchasing Manager Data Suggest Economy is in Reverse

It may be that one of the roles of a politician is to reassure the peasants. However, this peasant did not feel there was a lot of credibility in yesterday’s assurances to the City Press from our recently anointed finance minister Nhlanhla Nene that the economy is not heading into a recession. Certainly, the two important economic indicators out today tend to suggest that when the data for the current quarter are released, they may well show that it followed Q1 in being a period of negative growth. Firstly, there was the Kagiso Purchasing Managers’ Index (PMI) for May, which fell to 44.3, down from 47.4 the previous month. Then came the monthly numbers from the automotive manufacturers’ association Naamsa, showing that year-on-year sales had fallen by 9.2% – with a shock 40.5% year-on-year decline in vehicle exports. Two horrible bits of economic news, which by no means give any backing to the assurances we have seen from our new finance minister, who appears to have had the chair pulled out from under him, so to speak. I just hope that when the Q2 GDP numbers are released that he is proved right, and I am proved wrong.

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