JOHANNESBURG, June 1 – South Africa’s manufacturing sector remained in growth territory during May, although momentum slowed as softer demand and weaker production activity weighed on business conditions.
According to the latest Absa Purchasing Managers’ Index (PMI), the seasonally adjusted headline index declined to 50.8 in May from 52.6 in April. Despite the moderation, the reading remained above the 50-point threshold that separates expansion from contraction.
The latest data suggests that manufacturers continue to experience growth, but at a slower pace than earlier in the year.
Absa attributed the slowdown partly to fading demand that had previously been supported by customers bringing forward purchases in anticipation of higher costs.
As that temporary boost subsided, both production activity and new orders weakened during May.
The business activity component of the survey fell back into contraction territory, dropping to 43.5 from 52.8 in April. New sales orders also declined significantly, falling to 44.6 from 52.9 in the previous month.
The figures indicate that manufacturers are facing a more challenging operating environment as demand softens and economic uncertainty persists.
Higher input costs remain another source of pressure for the sector.
Manufacturers continue to grapple with rising production expenses driven by a weaker rand and elevated international oil prices, both of which have increased the cost of imported inputs and transportation.
Some businesses surveyed also expressed concerns that the recent slowdown in demand could continue over the coming months, potentially limiting production growth and investment activity.
Despite these near-term challenges, sentiment regarding future business conditions improved.
The index measuring expectations for business conditions over the next six months climbed to 52.9 from 47.4 previously, returning to expansion territory and signaling growing optimism about the sector’s medium-term outlook.
The improvement suggests that while manufacturers remain cautious about current market conditions, many expect activity to strengthen as economic conditions stabilize and demand gradually recovers.
The PMI data highlights a mixed picture for South Africa’s manufacturing industry, where continued expansion is being tempered by weaker orders, higher costs and ongoing external economic pressures.
