“What really encouraged me was the increase in the employment sub index, we saw it ticking up for the first time in about 18 months or so. That tells me that there could be some improved job prospects in the manufacturing sector,” Isaac Matshego, an economist at Nedbank told CNBC Africa.
South Africa’s Purchasing Managers Index (PMI) reached a six-year high at 56.5 in August, exceeding a consensus of 51.8.
“It was a very encouraging number. Over the past four or five months we’ve seen the PMI picking up, which simply means that conditions for our manufacturers are improving. When that number is above 50, it means that conditions are getting better,” Matshego explained.
While new car sales decreased by 0.3 per cent to 56,000 in the same month, he believes that, realistically, the number can be sustained.
“The question is, the state of the economy at the moment, can it sustain that sort of number? My feeling is that that’s a reasonable number in the current environment. Next month we could see a bit of a decline which wouldn’t be surprising to me.”
Matshego alluded to the fact that the manufacturing sector is somewhat dependent on exports and insists that Europe’s PMI numbers are very encouraging for South Africa.
“If we can really get our act together in the manufacturing sector, we could benefit from improving conditions from the eurozone, which is our major trading partner,” he said.