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Johannesburg - The latest Kagiso Purchasing Managers' Index (PMI) showed a glimmer of hope when it increased by 1.7 points to 49.1 in January, according to figures released by Kagiso Tiso Holdings (KTH) on Friday.
That it was still below 50 for the fifth month in a row, suggested that growth in the manufacturing sector continued to be sub-par, KTH said in a statement.
"On a positive note, the seasonally adjusted business activity, new sales orders and inventory indices posted solid gains," it said. New sales orders were up six points and inventories 9.5.
KTH said the rise in new sales orders could be an indication of increased foreign demand for South African manufactured goods.
"The apparent stabilisation in the [European Union] economy and the weaker rand exchange rate may have helped in this regard", Bureau for Economic Research senior economist Hugo Pienaar said in the statement.
Furthermore, the increase in new sales orders could reflect better demand from the South African mining sector as mining output recovered from strikes in the third and fourth quarters of 2012.
The business activity index gained 2.3 points to 49.6.
January represented the third consecutive increase after the index slumped to 43.2 in October 2012 in the wake of widespread strikes.
However, the results also showed that after a more than seven point decline in December 2012, the employment component lost a further 2.4 points in January to reach 42.3 - the worst since 2011.
"At the start of the year, this does not bode well for actual job creation in the manufacturing sector", said Pienaar.
Input costs went up for the sixth consecutive month as the PMI price index increased by 2.3 points to 82.
This could be explained by a combination of a sustained weakening trend for the rand exchange rate through January and a higher oil price, KTH said.
The survey is conducted monthly by the BER at the University of Stellenbosch in conjunction with The Chartered Institute of Purchasing and Supply (CIPS).
It is a survey of purchasing managers in South Africa's manufacturing sector, and their answers are used as indications of business conditions in the sector.
