South Africa’s manufacturing sector experienced a volatile 2024 with a second consecutive monthly decline in activity in December reversing the upward momentum of earlier months.
This is according to the seasonally adjusted Absa Purchasing Managers’ Index (PMI) which declined by 1.9 points to 46.2 points in December, remaining in contractionary territory.
The 2024 fourth quarter average PMI was 49 points, not significantly different from the 49.8 points recording in the third quarter but above the first and second quarters’ respective 47.8 and 48.1 points.
According to the PMI, the manufacturing sector experienced a volatile year, with the 1.9 points decline in December reversing the gains seen in September and October.
The business activity index decreased by 8.7 points to 40.3 in December.
“The pullback in production came on the back of a sharp fall in demand. The new sales orders index fell to 37.4 points from 45.9 in November. Worryingly, some respondents noted that conditions in December 2024 were worse than usually seen in December,” the index report noted.
In addition, export sales dropped sharply and fell back to levels last seen in the first half of 2024.
The supplier deliveries index rose to 56 points, increasing by 7.7 points and moving above 50 points for the first time in three months.
“With production and orders being significantly weaker, higher demand for supplies is unlikely to be the cause of the delays… Logistical issues remain, both locally and in the global markets, which likely caused the slowdown in delivery times,” the PMI noted.
The employment index decreased by 0.4 points to 46.5 and remained in contractionary territory for the ninth consecutive month. Due to volatility and largely depressed activity, the employment index has been below the neutral 50-point mark for eleven of the twelve months.
The purchasing price index fell by 1.3 points to 60.4 in December.
“This was surprising, given that the rand exchange rate was relatively weaker in December, while fuel prices and LP Gas increased at the beginning of the month,” the PMI noted.
The most positive outcome of the PMI was that the index measuring expected business conditions in six months’ time increased by 5.2 points to 67.6 in December, indicating that manufacturers remain optimistic about business conditions in the future.
