The index, which measures manufacturing activity, increased slightly to 59,1 points last month from a revised 58,8 in August.

Head of fixed income at Investec Asset Management, Andre Roux, said it was in line with index readings since June, suggesting a "stabilisation in the growth of manufacturing activity".

"Nontheless, manufacturing conditions remain favourable, and are substantially stronger than a year ago, and comparable to the buoyancy experienced during 2002 in the wake of the rand's sharp appreciation," said Roux.

"The big difference this time around, however, is that domestic final demand is driving the growth, while in 2002 it was exports and import replacement."

The index readings which tend to lead Statistics SA's monthly manufacturing production figures by a few months points to steady growth in production going forward.

According to Stats SA, manufacturing production grew 5,5% year on year in July the strongest growth in 22 months.

There was strong growth recorded in all of the 10 manufacturing industries in July, indicating that the sector was adapting to the strong rand.

The purchasing managers index shows that new sales orders were steady last month, while business activity increased sharply. The employment subindex also increased mildly, which was encouraging for job creation, said Roux.

The price subindex surged to 64,9 points last month from 47,3 in August, which Roux said could have been caused by the effects of higher crude oil prices and the weakness in the rand.