South African manufacturing activity contracted for the second consecutive month in December, according to Absa’s purchasing managers’ index (PMI) survey.
Source: Reuters. A general view shows the Tetra Pak factory floor in Durban, South Africa, 4 April, 2024.
The seasonally adjusted index, released this week, showed South Africa’s manufacturing sector faced ongoing challenges in December 2024, as the Absa PMI dropped to 46.2, signalling contraction.
This second consecutive monthly decline in December reverses the upward momentum seen in September and October. “Worryingly, some respondents noted that conditions in December 2024 were worse than usually seen in December,” Absa noted.
Production and orders decline
The business activity index decreased by 8.7 points to 40.3 in December. The pullback in production came on the back of a sharp fall in demand. The new sales orders index fell to 37.4 points from 45.9 in November.
In addition, export sales dropped sharply and fell back to levels last seen in the first half of 2024. The supplier deliveries index rose to 56 points, increasing by 7.7 points and moving above 50 points for the first time in three months.
“With production and orders being significantly weaker, higher demand for supplies is unlikely to be the cause of the delays (with the inversed index increasing when deliveries are slower, as this is normally seen as a positive sign with manufacturers competing for supplies),” Absa added.
Logistical delays impacted production.
However, despite volatility, manufacturers remain optimistic, with future business expectations rising to 67.6, indicating hope for improved conditions in the coming months.
