The South African manufacturing sector started 2025 on a weak footing, with the Absa Purchasing Managers’ Index (PMI) falling to its lowest level since August 2024. This decline signals a continued struggle for the sector, hindered by logistical challenges, weak domestic demand, and global trade uncertainties. While there are some positive signs of recovering demand, concerns remain about rising purchasing prices and falling employment levels.
Manufacturing in South Africa continues to grapple with challenges such as logistics, hindering its ability to create sufficient jobs. The disheartening manufacturing PMI for January reveals that the sector will likely not contribute to economic growth in the first quarter. Prices and employment within the manufacturing sector are particularly concerning.
The Bureau for Economic Research (BER) reports that the seasonally adjusted Absa Purchasing Managers’ Index (PMI) commenced the year on a weak note, declining by 0.9 points to 45.3 in January. This marks the third consecutive contraction and the lowest level since August 2024. The BER states that this suggests the loss of momentum observed at the end of 2024 has not reversed at the start of the year. However, there were encouraging signs as activity and demand improved from low levels, although they remained within contractionary territory. The Absa PMI is an economic activity index based on a survey conducted by the Bureau for Economic Research (BER) and sponsored by Absa. S&P compiles the S&P Global South Africa PMI from around 400 private sector purchasing managers’ responses to a questionnaire. The business activity index increased by 3.2 points to 43.5 in January. The BER attributes this slight improvement in activity to indications of recovering demand, as new sales orders rose to 42 points from 37.4 in December. Export sales also showed a slight recovery, but the index remained below the November level. Respondents cited several issues hindering production and demand, including trade disruptions with Mozambique due to political turmoil and fuel shortages affecting air freight.While activity and orders increased, the other three components of the headline PMI declined. The supplier deliveries index decreased by 6.1 points to 49.9 points, suggesting faster delivery times, which could be positive if it points to improved supply chains. However, given the logistics issues raised by respondents, the BER believes this is unlikely and probably reflects weaker demand for supplied goods. Another concerning trend is the employment index, which decreased by 2 points to 44.4 and remained in contractionary territory for the tenth consecutive month. The BER finds this worrisome, stating that employment contracted during the first three quarters of 2024, and the PMI suggests it will take some time to recover. The inventories index also declined to 46.5 from 50.7. In contrast to a sustained downward trend, the purchasing price index increased by 7.8 points to 68.2 in January, driven by a weaker rand exchange rate and higher international oil prices, with a fuel price increase at the start of the month. Looking ahead, a further fuel price increase is anticipated in February, and the BER warns that renewed cost pressure could partially explain why the index tracking expected business conditions in six months’ time decreased by 2.6 points to 64.9 in January. Uncertainties regarding global trade dynamics may have also contributed to the decline. Nevertheless, despite the fall, the current level indicates that manufacturers remain relatively optimistic about business conditions in the future, according to the BER
Manufacturing South Africa PMI Economic Growth Employment Logistics Demand Prices Global Trade
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