Africa-Press – South-Africa. Sentiment among South African manufacturers climbed to a three-month high in January, driven by improving local demand.
Absa’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, rose to 48.7 from 40.5 in December, the Johannesburg-based lender said in an emailed statement on Monday.
The reading nonetheless remained below the 50-point mark for a fourth straight month, signaling a continued industry contraction.
“The size of the improvement is notable and suggests a potential reset in production momentum entering the first quarter of the year,” Absa said.
“While the headline index remains below 50, signs of improving activity, easing input costs and stronger domestic demand provide early momentum.”
A continued upward trend in orders and production will be crucial to sustain the current recovery, it added.
A business-activity index increased by 5.3 points to 51.4, fueled by a renewed pickup in manufacturing production, while a new sales-order gauge rose 10 points to 45.4, underpinned by increased local demand.
“This represents a meaningful improvement,” Absa said. “The increase was driven entirely by domestic demand, as export sales continued to weaken and dropped to their lowest level since the height of the Covid-19 pandemic, likely weighed down by the stronger rand.”
A gauge measuring expected business conditions in six months’ time dipped to 66.4 from 68.8 as manufacturers remain optimistically cautious over how meaningful the recovery will be.
Source: dailyinvestor
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