The index, which gauges manufacturing activity in Africa’s most industrialised economy, fell to 51.2 points in July from 53.9 points in June, remaining above the 50-point mark that separates expansion from contraction.
The business activity sub-index ticked down slightly to 62.9 from 64.6 in June, Absa said in a statement on Monday.
“The fact that more respondents signalled a further increase in output compared to those seeing further growth in demand, could perhaps be explained by some firms producing more in an attempt to catch up on production lost during earlier stricter lockdown levels,” Absa said.
The employment sub-index showed the manufacturing sector was still shedding jobs even with activity recovering.
South Africa imposed a strict lockdown in late March to curb the spread of the coronavirus but has since eased some of the restrictions, with most key industries now allowed to operate at full capacity subject to health and safety protocols.