The Absa purchasing managers’ index (PMI) beat expectations in January, rising to 50.9 points from 46.7 in December.
This was the first time since July that the index has come in above the neutral 50-point mark, suggesting the manufacturing sector has started the year on a relatively solid footing compared with 2016.
Trading Economic had forecast an increase to 48.8 for January.
The PMI, which is compiled by the Stellenbosch-based Bureau of Economic Research, showed that the index measuring expected business conditions in six months’ time surged to 70.3 — the best level since early 2010.
Absa said it was somewhat surprising that respondents were so upbeat about future business conditions.
The bank said in a statement that this could be due to manufacturers targeting the export market, which may benefit from an uptick in global demand, as reflected by the sustained high levels of PMI readings in the US, Europe and, to a lesser extent, China.
The new sales orders index managed to remain above the neutral 50-point mark for a third straight month, though it dropped 50.9 points to 50.4 in January.
The business activity index rose to 52.7, its best level since June, while the employment index improved but remained below 50.
The suppliers’ performance index shot up to 53 points from 40.9 the month before.
The PMI also indicated that demand from SA’s recovering agriculture sector might improve throughout 2017, but that consumer spending was likely to remain under pressure.
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