The seasonally adjusted manufacturing Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research (BER), ticked up by 0.6 index points to 51.4 in June.

This brought the average for the second quarter to 49.2 index points, slightly below the average of 49.9 recorded in the first quarter.

BER economist Lisette IJssel de Schepper said this suggested that the manufacturing sector remained under pressure and that a solid recovery in quarterly manufacturing output growth in the second quarter was unlikely.

Encouragingly, the business activity index rose above the neutral 50-point mark for the first time since January, reaching 51.7 in June, compared with 49.6 in May.

In line with the improvement in output, the employment index rose to 48.7 index points – its level since June 2014.

However, output growth would have to be sustained going forward for manufacturing employment to improve notably, said the BER.

Further, the new sales orders index edged lower to 51.7 index points, from 52.2 in May.

“While domestic demand remains under pressure, some respondents indicated that they benefited from improved export orders,” said IJssel de Schepper.

The inventories index rose for a third straight month to 56.8 index points.

Manufacturers were expecting conditions to improve in the coming months as the index measuring expected business conditions in six months’ time edged up to 62 index points in June.

BNP Paribas Cadiz Securities economist Jeffrey Schultz commented, however, that the further ramp-up in manufacturer inventories suggested that local producers were preparing themselves for a tougher supply period ahead rather than this being an indication that domestic demand conditions were improving rapidly.

"This is supported through the fact that the PMI ‘leading index’ (new sales orders as a ratio of inventories) remains in negative territory after only briefly breaching above its neutral level of 1 in December last year," he added.

As expected, the price index continued its upward trend to 77.1 in June, up from 73.2 previously, driven mainly by higher fuel prices and the costs incurred by manufacturers to offset electricity supply constraints.