RTTNews - South Africa's seasonally adjusted purchasing managers' index for the manufacturing sector dropped to 37.3 in July from 37.9 in the preceding month, a report by Kagiso Securities showed Monday.

The firm said the persistent weak readings and the associated contraction in manufacturing output are disappointing especially since the global PMI has already reached levels above 45 index points.

A reading above 50 indicates expansion, while a reading below 50 signals a contraction.

In July, the pace of output decline worsened, with the business activity index falling to 33.8 from 37.9, while the new orders dropped to 35.8 from 38.2.

At the same time, the inventory index and purchasing commitments improved in the month. Further, the employment index climbed to 40.8 from 36.9, raising hopes that the worst of the layoffs in the manufacturing sector for 2009 was over, Kagiso said.

Meanwhile, the firm said that for the fifth consecutive month purchasing managers became more hopeful about better conditions in the second half of the year. The corresponding expected business conditions index climbed to 55.1 from 52.8.

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