Johannesburg - The ABSA purchasing managers’ index (PMI) reached an eight-month high, rising a further 1.6 points to 52.5 last month after a 4.2 point rise in January and seconding a much-improved domestic
and global economic environment.
The high frequency and economic data on Wednesday showed that the country was experiencing green shoots with the index and continued low growth in credit balances showing an improvement.
Absa said the consecutive month improvement in the PMI and the broad-based nature of the uptick across subcomponents was a positive sign that the manufacturing sector had started the year on a solid footing.
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“Indeed, four of the major subcomponents are above the 50-point neutral mark and the headline figure is at the highest level since last June.
"After the increases recorded in January and last month, the headline figure is closer to those of South Africa’s main trading partners after under-performing through the second half of last year.”
Uptick in exports
The PMI is compiled by the Bureau for Economic Research and sponsored by Absa.
Absa said most encouraging was new sales orders staying above the 50-point mark for a fourth straight month. “In fact, at 55.7points, the index is now at the best level since April.
"Respondents noted an uptick in exports, and the recovery in the agricultural sector is also likely lifting demand for manufactured goods.
"The sustained recovery in demand helped to lift the business activity index to 53.2 index points last month, up from 52.7 in January.”
Absa said on the back of the sustained trend for the rand, the purchasing power index moved lower last month.
In addition, the first month this year saw the value of outstanding credit balances in the South African household sector rising by a much subdued 0.6 percent year-on-year to R1494.2 billion, after growth of 0.7 percent at the end of last year.