JOHANNESBURG, Sept 1 – South Africa’s manufacturing sector deteriorated further in August, with business activity and new orders falling sharply as weak domestic demand weighed on factory conditions.
The seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined to 45.8 in August from 46.8 in July, marking its fourth consecutive monthly fall and the weakest reading recorded so far in 2026. A reading below 50 indicates a contraction in overall manufacturing conditions.
The decline was driven by a sharp deterioration in production activity. The business activity index dropped to 40.2 from 48.8 in July, reaching its lowest level of the year. The new sales orders index also weakened, falling to 40.3 from 44.1 and reversing the improvement recorded in the previous month.
According to Absa, the weakness was concentrated largely in the domestic market. Manufacturers reported subdued demand, fragile consumer confidence and reduced spending on non-essential goods, while export sales showed some improvement.
The deterioration in orders and production points to continued pressure on manufacturers as businesses contend with softer domestic consumption. The figures also suggest that the manufacturing sector entered the second half of 2026 on a weaker footing after failing to sustain the modest improvement seen in some areas during July.
Labour conditions remained under pressure, although the pace of deterioration moderated. The employment sub-index increased to 46.2 from 42.2, but remained below the 50-point threshold, indicating that factory employment continued to contract.
Despite the weakness in current operating conditions, manufacturers expressed greater confidence about the months ahead. The index measuring expected business conditions six months forward rose to 54.7 from 49.3, moving back above the neutral 50 level.
Absa said, “This provides some hope that manufacturers view the current weakness as temporary, although the combination of subdued orders and sharply weaker production suggests that near-term conditions remain challenging.”
The divergence between current activity and future expectations will be important for assessing whether the August deterioration represents a temporary slowdown or a more prolonged weakness in South Africa’s industrial sector. For now, the latest PMI data point to subdued domestic demand as the principal constraint facing manufacturers, even as expectations for a recovery further ahead improve.
