Key facts
- South Africa's manufacturing PMI fell to 45.8 in August, down from 46.8 in July.
- This is the lowest reading for the year and the fourth consecutive monthly decline.
- Business activity and new sales orders indices both declined significantly.
- Domestic demand was cited as the primary reason for the slump, while export sales improved.
- Factory employment continued to decline but at a slower rate.
- Manufacturers expressed increased optimism about future business conditions.
South Africa's manufacturing sector experienced a further decline in sentiment during August, as indicated by the Absa Purchasing Managers' Index (PMI). The seasonally adjusted PMI dropped to 45.8 from 46.8 in July, marking its fourth consecutive monthly decrease and reaching its lowest point of 2026. A reading below 50 signifies a contraction in overall business conditions for manufacturers.
The business activity index saw a sharp fall to 40.2, its lowest level this year, down from 48.8 in July. Similarly, the new sales orders index decreased to 40.3 from 44.1, erasing the gains made in the previous month. Absa attributed the weakening demand primarily to domestic factors, noting that while export sales showed some improvement, overall demand remained subdued due to weak consumer confidence and reduced spending on non-essential items.
In terms of employment, the sub-index rose to 46.2 from 42.2, suggesting that while factory employment continued to contract, the pace of job losses slowed. Despite the challenging current conditions, manufacturers expressed greater optimism about the future. The index measuring expected business conditions in six months increased to 54.7 from 49.3, moving back above the neutral 50-point threshold. Absa commented that this suggests manufacturers view the current weakness as temporary, though near-term conditions remain difficult given subdued orders and weaker production.