JOHANNESBURG, July 1 – South Africa’s manufacturing sector weakened in June, with business activity slipping back into contraction as subdued demand led to fewer new orders, according to the latest Purchasing Managers’ Index (PMI) survey sponsored by Absa.
The seasonally adjusted PMI declined to 47.3 points in June from 50.8 in May. A reading below 50 indicates a deterioration in overall business conditions, signalling that the country’s manufacturing sector lost momentum during the month.
According to Absa, the survey was conducted after the United States and Iran reached an interim agreement to end hostilities and reopen the Strait of Hormuz, a development that contributed to lower global oil prices and eased cost pressures for manufacturers.
The bank noted that a sharp decline in the PMI’s purchasing prices component “suggests that April and May may have marked the peak of price pressures,” particularly following fuel price reductions that came into effect on Wednesday.
Despite easing input costs, manufacturers reported softer demand as some customers delayed purchases in anticipation of further price declines. According to Absa, this behaviour contributed to a decline in new orders during the month.
While current business conditions weakened, manufacturers expressed greater optimism about the outlook for the next six months. The survey’s sub-index measuring expected business conditions increased, reflecting confidence that easing geopolitical tensions in the Middle East could support a more favourable operating environment.
However, Absa said some respondents also identified nationwide anti-migrant protests on 30 June as a source of uncertainty, limiting the overall improvement in business sentiment.
The latest PMI highlights the mixed conditions facing South Africa’s manufacturing sector, with lower energy costs providing relief from inflationary pressures while subdued domestic demand and social uncertainty continue to weigh on industrial activity.
