JOHANNESBURG, August 3 – South Africa’s manufacturing sector remained under pressure in July, with business sentiment deteriorating further as weak export demand and renewed geopolitical tensions weighed on confidence, according to the latest Absa Purchasing Managers’ Index (PMI).
The seasonally adjusted PMI, sponsored by Absa, declined to 46.8 in July from 47.3 in June, remaining below the 50-point threshold that separates expansion from contraction and signalling a continued deterioration in manufacturing business conditions.
Despite the weaker headline reading, Absa said the decline likely overstated the challenges facing the sector, as key indicators of domestic activity showed signs of improvement.
Both the business activity and new sales orders sub-indexes increased during the month, suggesting that stronger domestic demand helped offset weaker export performance.
However, manufacturers became more cautious about the outlook for the months ahead. The index measuring expected business conditions over the next six months fell sharply to 49.3 from 56.6 in June, slipping below the neutral 50-point mark and indicating growing pessimism among firms.
According to Absa, “The renewed escalation of tensions in the Middle East, together with higher oil prices following June’s lows, likely contributed to the deterioration in sentiment.”
Higher energy prices and geopolitical uncertainty have continued to cloud the operating environment for manufacturers, particularly those exposed to international markets, while subdued global demand has weighed on export activity.
The latest survey suggests that although South Africa’s manufacturing sector continues to benefit from pockets of resilience in domestic demand, external headwinds and geopolitical risks remain significant obstacles to a sustained recovery.
