The seasonally adjusted Absa Purchasing Managers’ Index (PMI) increased to 46.2 points in June, compared with the 45.4 points recorded in May.

Absa said the average level for the second quarter was 46.3 points, compared with an average of 47 in the first quarter of the year.

Investec commented that the rise in the headline PMI did not signal a meaningful improvement in the manufacturing sector’s operating conditions in June.

“The first update for the second quarter period of actual manufacturing production data signalled a recovery in the performance of the sector from the contraction in the first quarter.

“However, any rebound in manufacturing production would be mainly a function of low statistical base factors and therefore may not be sustained in subsequent quarters. Indeed, other PMI indicators signal a deterioration in operating conditions with manufacturing employment and purchasing activity declining,” it stated.

Absa quoted “official statistics” that had suggested that quarterly manufacturing output was set to rebound strongly in the second quarter after a dismal first quarter of the year.

However, part of this rebound was driven by a normalisation in output after load-shedding disrupted production earlier in the year.

The PMI survey further suggested that underlying demand conditions remained weak, limiting the possibility of a sustained recovery in output going forward.

“The index tracking expected business conditions in six months’ time declined by 6.7 points in June, after remaining unchanged in May. Part of this may be owing to the reported decline in export orders in June, with the expectation of slower global growth foretelling that export demand would likely remain under pressure in coming months,” said Absa.

Only one of the five major subcomponents of the PMI came in above 50 points in June.

The index tracking suppliers’ deliveries rose to 56.9 points, from 55.7 points in May.

Both the business activity and new sales orders indices edged higher in June, but remained below the 50-point mark for a fifth consecutive month.

The inventories index had increased in June after declining in the preceding two months.

“The only major subcomponent of the headline PMI to decline, compared with May, was the employment index. Worryingly, the employment index recorded its worst quarter since 2009, which did not bode well for potential job creation in the sector.”

Meanwhile, purchasing prices edged higher in June after two straight declines. Absa said the uptick was likely driven by a weaker rand exchange rate, which pushed up the cost of imported raw materials and intermediate products.