The seasonally adjusted Absa Purchasing Managers’ Index (PMI)1 rose to 48.6 index points in November 2017. This was the fourth consecutive increase and brought the index to the best level since May 2017. However, the PMI remained stuck below the neutral 50-point mark for a sixth straight month, suggesting that the sector still faces headwinds.

Encouragingly, the business activity index continued its recent upward trend and rose to 48 in November, which is the highest level since May 2017. The average reading for the fourth quarter (so far) is well above the average recorded in the third quarter, which is a tentative suggestion that the sector may again record positive growth in the final quarter of the year.

The new sales orders index fell back slightly, to 49.1 from the 49.9 points reached in October. The employment index also dipped lower in November, after an improvement in the previous month, suggesting that the sector is unlikely to generate significant employment during the fourth quarter.

On the back of an (on average) weaker rand exchange rate and higher Brent crude oil price, the purchasing price index surged to 80.7 index points in November - the highest level since June 2016.

Purchasing managers expect no change in business conditions in six months’ time. The index tracking expectations stood at 50 points in November, down from 51.2 in October. However, on the positive side, the new sales orders index came in above inventories, which means that the PMI leading indicator is above 1. This usually bodes well for output growth in coming months.