The Absa Purchasing Managers' Index (PMI) rose for a third month straight in March, showing that the first quarter of 2021 has been good for South Africa's manufacturing sector, benefitting from the country's increased business activity.
The PMI climbed to 57.4 index points in March, from 53 in February. It was also the highest point that the PMI has reached since June 2020, when it clocked 53.9 index points.
The PMI, which is compiled by the Bureau for Economic Research (BER) and sponsored by Absa, showed that all index components showed improvement from February. But confidence is the highest on the purchasing price index, which reached a five-year high in March 2021.
The BER said overall, the PMI was supported by an increase in export sales, while domestic demand is also likely to increase now due to the relaxation of local lockdown restrictions from the adjusted level 3. SA moved to adjusted alert level 1 on 1 March 2021.
The BER said companies were already reporting solid improvement in demand. The new sales orders index rose to 60.4 points from 54.
"Although it remains to be seen whether the uptick in demand is sustained in coming months, the rise of late drove a further improvement in business activity … The further rise bodes well for a continued recovery in manufacturing production," wrote the BER.
All other components of the index, except the employment index, are now above the 50-point neutral mark. The employment index moved marginally from 44.1 points in February to 44.4 points.