South African private sector activity expanded for the first time in 18 months in October as an easing of coronavirus restrictions continued to boost output and new sales, a survey showed on Wednesday.

IHS Markit’s Purchasing Managers’ Index (PMI) rose to 51 in October from 49.4 in September, back above the 50 level that separates expansion from contraction for the first time since April 2019.

“Central to the improvement in overall business conditions were increases in both new orders and output,” IHS Markit said.

In mid-September, President Cyril Ramaphosa further loosened what had been one of the world’s strictest lockdowns at the height of South Africa’s Covid-19 outbreak, squeezing businesses and pushing the economy into a record contraction.

The output index — at 51.5 in October — rose for the fifth month running from May’s record low of 22.8. IHS Markit said that where activity increased, firms often linked the rise to the relaxation of Covid-19 restrictions and a subsequent rise in new orders.

‘Mechanical’ rebound

The new orders index rose to 51.7 in October from 48.5 in September.

IHS Markit economics director Andrew Harker said the latest data suggested that GDP could grow again during the final three months of 2020, following an anticipated “mechanical” rebound in the third quarter.

“That said, caution is provided by the situation in other parts of the world where a second wave of the virus has occurred,” Harker added. “South Africa will therefore need to keep Covid-19 suppressed if the current recovery is to be sustained.” — Reported by Olivia Kumwenda-Mtambo, (c) 2020 Reuters