The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose to 48.1 index points in October, up from a revised 45.1 index points in September.

The October level was slightly higher than the average of 47.3 index points recorded during the third quarter. This is in line with the average of 48.3 index points recorded during the first nine months of this year.

In a statement on Friday, Absa noted that only four of the PMI’s subcomponents had improved from September, with inventories having moved lower.

The business activity index had increased after two consecutive declines, while new sales orders had improved somewhat from a sharp drop in September.

However, both indices remained below the 50-point mark, which Absa said pointed to a decline in both demand and output. This was countered by the supplier deliveries index, which improved further in October.

The employment index also ticked up, but at 42.3 points remained low. 

The headline PMI only managed to edge above the neutral 50-point mark twice during the course of this year – in January and July. However, even with the difficult current environment, respondents are said to have turned more negative about business conditions going forward.

The index tracking expected business conditions in six months’ time fell to 45.7 in October – the lowest level in a year.

This is owing to respondents potentially being concerned about the impact of the slowing global economy on demand for exported goods, alongside the mid-month bout of load-shedding in October, which likely also dampened spirits.

Commenting on the PMI results on Friday, financial services company Investec said that while the manufacturing PMI had increased, it continued to signal subdued conditions at the start of the fourth quarter.

This, Investec said, was owing to global manufacturing activity having slowed to levels last seen during the 2008/9 global financial crisis. This would point to weak prospects for the performance of South Africa’s manufactured goods exports, it lamented, noting that a meaningful lift in domestic demand was not expected as business and consumer confidence were entrenched at low levels.

Against the weak demand backdrop and challenging operating conditions, including interrupted electricity supply, Investec said the manufacturing sector was unlikely to make a meaningful contribution to the country's gross domestic product.