The Investec Purchasing Managers Index — which measures the level of activity in the manufacturing sector — declined marginally from the record lows of 36 index points in March to 35.6 index points in April.

"The latest readings provide some evidence that the severe downward pressures impacting the manufacturing sector are showing signs of moderation," said Mokgatla Madisha, portfolio manager at Investec Asset Management in a statement on Monday.

"While most indicators remain in deep negative territory, we take some comfort from the fact that they seem to be stabilising, arresting the steep declines seen at the end of 2008 and early in 2009," Madisha said.

The seasonally adjusted business activity index saw a slight uptick to 32.8 from 31.2 in March while new sales orders saw a similar improvement over the month.

The expected business conditions index, aimed at capturing purchasing managers' medium term outlook, witnessed a further increase to 48.3 points, suggesting that the poor near-term conditions could see some improvement towards the latter part of the year.

"This is broadly consistent with similar global surveys," Madisha said.

However, he said the improvements had not been uniform and the sharp drop in inventory, purchasing commitment and employment indices clearly indicated continued weak demand and an uncertain outlook for the sector.

The continued drop in the prices index as a result of demand pressures and the firm currency was positive, he said.

"These readings are consistent with the sharp fall in the Producer Price Index over the last few months, providing further support to continued policy accommodation by the SA Reserve Bank."

The PMI survey is conducted on a monthly basis by the Bureau for Economic Research at the University of Stellenbosch in conjunction with the Institute of Purchasing Managers in South Africa and sponsored by Investec Asset Management.

The index is based on the PMI produced by the National Association of Purchasing Managers in the US.

Sapa

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