South Africa’s manufacturing sector continues to struggle, with the latest Absa Purchasing Managers’ Index (PMI) showing contraction for the seventh consecutive month. The PMI fell by 1.6 points to 43.1 in May, remaining well below the neutral 50-point mark, signaling ongoing weakness in the industry.
Sector Struggles Despite Minor Improvements
While there were slight upticks in business activity and new sales orders—likely supported by a modest recovery in domestic demand—export sales declined sharply. Economists at Absa noted that supply delivery times were a major drag on the PMI, reflecting both easing logistics bottlenecks and subdued business demand.
“The index has been artificially high recently due to supply chain disruptions, but now it suggests that demand in the sector remains weak,” an Absa economist said.
Negative Impact on GDP Expected
The prolonged downturn in manufacturing is expected to weigh heavily on South Africa’s first-quarter GDP figures, set to be released by Statistics South Africa (Stats SA) this week. Analysts warn that most sectors, including manufacturing, production, and logistics, have declined since January, with only new and used vehicle sales showing growth.
“When you look at the GDP number, it’s very hard to be optimistic,” an analyst commented. “Almost every indicator has moved backward this year.”
Some Hope for the Future
Despite the grim short-term outlook, business sentiment improved significantly in May. The index tracking expected business conditions in six months surged by 13.9 points to 62.5—the highest level since late 2024. Analysts attribute this optimism to the suspension of U.S. global tariff hikes and hopes that political disagreements within South Africa’s Government of National Unity will be resolved.
While the manufacturing sector remains under pressure, businesses appear cautiously hopeful that conditions could stabilize in the latter half of the year. However, for now, the industry’s struggles continue to drag on South Africa’s broader economic performance.