RECESSION RECOVERY
Manufacturing index signals softer third quarter
Economic growth is expected to rebound in the second quarter after the recession
Economic growth is expected to rebound in the second quarter after the recession, but the Absa purchasing managers index (PMI) suggests the third quarter may be softer. The index was up to 44 points in August after slumping to 42.9 in July, the lowest level since the 2009 financial crisis. But the index remains below the 50-point mark, which divides expansion from contraction in the manufacturing sector. Capital Economics economist John Ashbourne said that while the PMI tended to overstate downturns, it did signal a subdued third quarter. "Even if the survey is overstating the weakness of manufacturing, it does suggest that, following a rebound in the economy in [the second quarter], conditions probably softened in the third quarter," he said. Investec economist Kamilla Kaplan said: "The PMI averaged 43.5 in the first two months of [the third quarter] and, at this stage, suggests that the manufacturing sector may again weigh on GDP." Kaplan said based on indications provided by the ...
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