PMI rises, manufacturing under pressure

Johannesburg - South Africa's seasonally adjusted purchasing managers' index edged back into expansion territory at 50.5 in April although the manufacturing sector is still struggling, a survey showed on Thursday.

The index, a key measure of factory activity, was up 1.2 points from 49.3 in March, on improvements in business activity and new sales orders, sponsor Kagiso Tiso Holdings said.

New sales orders rose by 1.7 points to 53.7 in April while the business activity index increased by 4.5 points to 52.2. However, the employment index continued its decline, retreating 0.5 points to 42.1, its lowest level since July 2011.

"This suggests that manufacturers remain reluctant to increase production capacity until there is a notable and sustained improvement in demand," Kagiso said in a statement.

With the exception of April's rebound and another in February, the PMI has struggled below the 50 mark, which marks the difference between expansion and contraction, since September.

"The PMI results for April show marginal improvements amid challenging conditions and the outlook for the sector is relatively more positive," said Abdul Davids, head of research at Kagiso Asset Management.

"Manufacturers face significant input cost pressures, predominantly from higher fuel, electricity and labour costs."