By Garth Theunissen Feb. 1 (Bloomberg) -- The rand gained for the first day in four after South Africa’s purchasing managers’ index surged to its highest level in 21 months in January, indicating a recovery in the nation’s manufacturing sector is gathering momentum. The rand strengthened 0.6 percent to 7.5812 by 12:15 p.m. in Johannesburg, from a close of 7.6263 at the end of last week. The seasonally adjusted purchasing managers’ index increased to 53.6 from 52.5 in December, Johannesburg-based Kagiso Securities Ltd. said in an e-mail. The PMI has been above 50, which indicates an expansion in factory production, for three consecutive months. “The improvement we’re seeing in PMI readings around the world is a positive sign that demand is picking up and that’s good for our economy and the currency,” said Ian Cruickshanks, head of research at Nedbank Treasury in Johannesburg. “The risk is whether this recovery can be sustained.” PMI readings from China to Russia and the 16-member Euro region showed confidence in manufacturing industries around the world is improving, adding to signs that the global economy is recovering. Indications that South African manufacturing sentiment is improving may help halt the 14-month slump in the national statistics agency’s measure of factory output. Manufacturing production, which accounts for about 15 percent of Africa’s biggest economy, has contracted every month since October 2008, according to Statistics South Africa’s measure. The Congress of South African Trade Unions, the country’s biggest labor federation, has blamed the rand’s almost 28 percent rally against the dollar last year for the decline, saying it made exports too expensive. Government bonds snapped a four-day advance, pushing up the yield on South Africa’s benchmark 13.5 percent security due September 2015 by 1 basis point to 8.39 percent. The bond’s price fell 7 cents to 122.50 rand. To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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