Johannesburg - The seasonally adjusted Kagiso Purchasing Managers' Index (PMI) increased by 0.6 points to 52.2 in July, Kagiso Tiso Holdings said on Thursday.
The index has now been above the key 50-point mark for four consecutive months.
The local PMI was in line with trends in the eurozone and the US, where recent flash PMI data have been improving to above the key 50 level, Kagiso Asset Management head of research Abdul Davids said.
The Kagiso PMI measures business conditions in the manufacturing sector. Below 50 indicates contraction in the manufacturing sector; above 50 shows expansion.
The new sales orders index increased by one point to 55.0 in July.
"This suggests that demand for manufactured goods has been slowly improving in recent months and is likely due to the weaker rand, which makes locally-produced goods relatively more competitive in the international market," Davids said.
The employment index gained 2.6 points to reach 47.5, while the business activity index, the second-largest weighted index, lost 0.4 points to reach 51.8.
Input costs accelerated in July, with the price index increasing by 5.8 points to reach 88.0 - a level last reached in March 2011.
"This steep increase is due to a weak rand and relatively higher oil prices during the month and the 6% increase in retail fuel prices," Davids said.
"The upward price pressure faced by manufacturers for most of this year was mainly due to higher transport, electricity, and labour costs, and manufacturers continue to face significant input cost pressures," he said.
The index measuring expected business conditions in six months' time increased by 0.2 points to 53.