South Africa’s Purchasing Managers Index (PMI) climbed to 47 in August from a record low of 42,8 in July, on new sales orders and business activity, sponsor Investec said on Monday.
The PMI, a measure of the country’s manufacturing activity, was however, still below the key 50 cut-off line between contraction and growth, Investec said in a statement.
Manufacturing activity has been under strain amid slower world growth and cooling domestic consumer spending, weighed down by a series of interest rate hikes.
”At 87,5, the PMI price index dipped below the level of 90 for the first time in five months,” said André Roux, head of fixed income at Investec.
”The slight respite in input price pressure is likely due to the combined effect of softer international commodity prices, particularly oil, and the stronger rand exchange rate,” Roux said.
”The seasonally adjusted inventory index as well as the purchasing commitments index increased to levels above 50, hinting that purchasing managers are adopting a slightly more optimistic stance,” Roux added.
Expectations regarding business conditions in six months’ time were also adjusted upwards.
However, employment conditions within the manufacturing sector remained under pressure, with the seasonally adjusted employment index increasing marginally from 42,4 in July to 43,6.
”While domestic demand is waning and foreign demand is likely to moderate going forward, the outlook for the sector remains under pressure.
”However, the uptick in the latest reading and an improvement in expectations by purchasing managers does suggest that the sector may be near the bottom in the current cycle,” Roux said. – Sapa