The seasonally adjusted Barclays Purchasing Managers’ Index (PMI) increased to 47.1 index points in February, up from 43.5 in January, to reach its highest level since October 2015.

The PMI was also above the average 45.6 recorded in the fourth quarter of 2015.

“Despite remaining well below the neutral 50-point mark for a seventh straight month, there were some encouraging signs in the underlying results. The improvement in the headline index was driven by increases in three of the five subcomponents. The other two remained more or less unchanged.

“Given that the increases were relatively broad-based, it will hopefully be sustained going forward,” said Barclays.

Indeed, purchasing managers were less pessimistic about expected business conditions in six months’ time, with this index increasing by 5.4 points to 44.8 in February.

The PMI leading indicator also nudged back above one for the first time in more than two years, owing to the new sales orders index edging above the inventories index, which Barclays said suggested production could pick up in coming months.

“However, these are only tentative signs that manufacturing output could pick up from a quarter-on-quarter contraction recorded in the fourth quarter of 2015. The sector still faces significant headwinds, most importantly persisting weak demand,” it stressed.

Further, the price index rose to 90.7 in February, from 86 in January, and was 30 points higher than in February 2015.

“The sharp increase in the price index was mainly on the back of the significantly weaker rand exchange rate, which pushed up the cost of imported raw materials and intermediary products.

“Conversely, the depreciated currency has not yet boosted export performance in any significant way. Encouragingly, some respondents indicated that import substitution is helping domestic orders.

“Of importance, the slight improvements observed in February’s PMI survey will need to be sustained going forward before the sector posts meaningful growth. Only if demand picks up on a sustained basis will production and subsequently employment be pulled higher as well,” stated Barclays.