Manufacturing activity moved into expansionary territory in July on the back of stronger domestic and global demand.
This led to the seasonally adjusted Absa Purchasing Managers’ Index (PMI) increasing by 6.7 points to 52.4 in July, from 45.7 recorded previously, and above the key 50 points level, which separates contraction from expansion.
Sentiment in the manufacturing industry in South Africa improved. The index tracking expected business conditions in six months’ time rose to 69.4, the highest level of optimism since early 2022.
Lisette IJssel de Schepper, the chief economist at the Bureau for Economic Research (BER), said yesterday the data reflected a solid start to the third quarter following a weak May and June.
“The survey results show that both domestic and global demand picked up, filtering through to higher activity,” De Schepper said.
The BER said the improvements suggested that on-hold orders were now being realised and translated into better activity, which boded well for a stronger performance by the sector in the third quarter of 2024.
The business activity index surged by 14.5 points to 50.8, moving into expansionary territory for the first time in three months. This was supported by new sales orders rising by a solid 17.5 points to 55.4. Both these indices returned to the expansionary territory for the first time in three months, following a poor performance in May and June.
Rising demand saw new sales orders climbing by a robust 17.5 points to 55.4, reflecting a strong uptick in demand.
Export sales also saw a notable increase in July, reversing four months of declines, which Investec economist Laura Hodes attributed to a pick-up in manufacturing conditions in a number of economies.
Meanwhile, the purchasing price index continued to bring good news as it declined for a fourth consecutive month, falling to 63.1 points in July from 64.5 points in June. This was the lowest in seven months and indicative of the continued easing of cost pressures. Petrol prices fell by close to R1/litre, with a smaller decline in diesel at the start of July, alleviating pressure on costs.
BUSINESS REPORT