The seasonally adjusted Kagiso Purchasing Managers' Index (PMI) increased in April after a slight decline in March, according to figures released on Thursday.

The improvement to 50.5 points in April, from 49.3 in March, was largely driven by improvements in new sales orders and business activity indices, Kagiso Asset Management research head Abdul Davids said in a statement.

"The PMI results for April show marginal improvements amid challenging conditions, and the outlook for the sector is relatively more positive."

The business activity index regained all the ground it lost in March and increased by 4.5 points to 52.2 in April.

"While this is a positive sign, the level of the index suggests that manufacturing production remains under pressure," Davids said.

The new sales orders index increased by 1.7 points to 53.7.

Davids said a 8.6 point decline in the inventory index to 47 points was due to manufacturers de-stocking because of uncertain economic conditions, particularly in Europe and China.

"Our key trading partners continue to grapple with tough conditions. Preliminary PMI results for April show that the Eurozone reached a four-month low of 46.5, while China dropped to a two-month low of 50.5," he said.

The employment index declined to 42.1, and was at its lowest level since July 2011, Davids said.

After eight consecutive monthly increases, the price index declined by 9.3 points to 78, because of lower oil prices in April.

"Although the price index declined notably in April, the relatively high level still indicates that manufacturers face significant input cost pressures, predominantly from higher fuel, electricity and labour costs," he said.

Following a decline in March, the index measuring expected business conditions in six months increased to 51.3.

The improved sentiment was supported by the PMI leading indicator, which expresses new sales orders as a ratio of inventories, moving above 1.1.

A level above one suggests inventory levels are low relative to demand. This was usually a good sign for future manufacturing production, Davids said.

"However, the operating environment remains challenging, as manufacturers face muted demand and relatively high input prices."