Analyses & Studies

January Manufacturing Activity Plunges: ABSA PMI at 43.6

The local manufacturing sector faced a daunting start to the year as indicated by the ABSA Purchasing Managers’ Index (PMI) for January. The index, which measures the prevailing direction of business activity in manufacturing in South Africa, recorded a headline figure of 43.6, a sharp decline from December's 50.9.

This significant drop is attributed to a pronounced deterioration in both demand and activity levels. Notably, such low levels have been observed only a handful of times outside of major crises such as the 2008-2009 global financial crisis and the 2020 COVID-19 pandemic-induced lockdown.

Sello Sekele, ABSA CIB Economist, highlights the multifaceted challenges facing manufacturers. He notes that the lack of structural reforms domestically, coupled with global economic headwinds, is hindering business confidence and growth.

The outlook suggests that a decline in global growth prospects could further exacerbate challenges for domestic manufacturing throughout the year.