South Africa's manufacturing sector has slipped back into contractionary territory, with the seasonally adjusted Absa Purchasing Managers’ Index (PMI) dipping by 1.6 points to 49.2 in October.
The drop in the index from 50.8 in September marks a swift reversal after just one month of signalling growth, highlighting the fragility of the sector's recovery amid persistent domestic and global headwinds.
The PMI's return below the critical 50-point threshold reflects mounting pressures on an industry already grappling with subdued demand.
Respondents to the Absa PMI survey painted a bleak picture, noting that "domestic demand was quieter than usual this time of the year”.
“On the export front, demand is also sluggish, complicated by the rise in US trade tariffs and logistical challenges,” the report noted.
It added that a sharp reversal in business activity, with the business activity index plunging five points to 49.4 in October, had fuelled the decline.
This slip back into contractionary territory marks the ninth such month out of ten in 2025, despite October's reading remaining the second-highest for the year after September's robust 54.4. The fleeting demand uptick seen last month had evaporated, leaving manufacturers cautious, the report noted.
New sales orders, a key measure of future output, mirrored this pessimism, declining 3.9 points to 48.9 following September's 5.4-point surge.
“Sales orders have contracted for eight of the ten months this year, indicating that the economy remains under pressure and demand remains subdued. Global demand remained under pressure as exports contracted for a seventh successive month,” the report said.
“The supplier deliveries index decreased by 1.4 points to 53.5 in September. It remains to be seen whether this decrease (signalling faster delivery times as the index is inverted) is due to the contraction in new orders or recent news of a better-performing port in KwaZulu-Natal,” it said.
Employment trends, however, remain weak. The employment index rose 2.2 points to 45.1 in October, but it has been contracting since April 2024. This follows a 4.9-point drop in September.
“As demand remains subdued and activity remains volatile, and minor improvements are not sustained, manufacturers are reluctant to increase staff levels,” the report noted.
The purchasing price index increased slightly by 0.2 points, edging up to 61.9 in October, despite a relatively stronger rand exchange rate, while the outlook for the coming months remains negative.
“Worryingly, the index tracking expected business conditions in six months’ time, declined from 49.2 in September to 46.1 in October, falling deep into contractionary territory. This is the lowest level since the 48.6 points in April 2025,” the report said.
