South Africa’s manufacturing sector showed slight improvement in March, as the Absa Purchasing Managers’ Index (PMI) rose to 48.7 points from 44.7 in February.
However, the index remained below the 50-point threshold, which separates expansion from contraction, indicating that conditions remain challenging for the sector.
While the headline PMI saw a four-point increase, it still marked the fifth consecutive month of contraction.
Absa noted that this was “the highest reading since the 52.6 points recorded in October last year,” offering some optimism despite ongoing challenges.
The business activity sub-index rose by 7.7 points to 48.3, with export sales contributing to the modest recovery in demand.
The index tracking export sales showed significant gains, with sales returning to expansionary territory for the first time in four months.
However, analysts caution that the sector’s prospects remain weighed down by factors such as scheduled power cuts and strained diplomatic relations with the United States.
Despite the uptick in March, the PMI average for the first quarter stood at 46.2, below the previous quarter’s 49 points.
The manufacturing sector continues to face significant cost pressures, with the purchasing price index falling by 5.9 points to 64.5.
Absa explained, “The rand exchange rate, in line with other emerging market currencies, has been relatively stronger against a weaker dollar, and this has served manufacturers well in terms of imported materials and fuel prices; hence, cost pressure is easing following two months of cost increases.”
On the supply side, the supplier deliveries index showed a slight improvement, increasing by 0.8 points to 54.1.
Employment figures remained low, with the employment index rising by only 3.9 points to 46.1, indicating that the sector has been unable to create significant job growth.
Looking ahead, the index tracking expectations for future business conditions decreased by 2.5 points to 58, suggesting that the outlook for the next six months remains uncertain, influenced by both domestic and international challenges.
