SOUTH Africa's purchasing managers index rose for the fifth month in a row in December as the pace of recovery in the manufacturing sector picked up, data showed yesterday.
Kagiso Securities said the PMI rose to 52,5 in December, from 50,3 in November. The PMI broke above the key 50 mark that indicates expansion in November, for the first time in 18 months.
"After an initial lag, the South African manufacturing rebound is now very close to being on par with the global trend," said Andre Coetzee, head of fixed income at Kagiso Securities.
South Africa's manufacturing sector expanded by 7,6percent in the third quarter, helping to lift the economy out of its first recession in almost two decades. The performance of the sector will greatly determine the pace of the broader recovery.
Monthly data from Stats SA have indicated the rate of decline in manufacturing output is slowing, in line with expansionary PMI readings.
"In Q3, the PMI averaged 41 index points, while in Q4 the average PMI rose strongly to 50,1 points. The gain bodes well for December's factory output data and in a broader sense also the 2009 Q4 GDP report," Kagiso said in a statement.
Business activity sub-index of the PMI jumped to 55,1 in December, the highest reading since mid-2007, from 47,3 in November. New sales orders increased to 54,7 from 54,4 in November, providing hope for a real expansion in manufacturing output, Kagiso said. - Reuters