The Absa’s purchasing managers’ index (PMI) rose a significant 8.2 points in January to 48.7 from December’s 40.5, thanks to a pickup in business activity, though weak exports dragged the overall picture down.
“The magnitude of this increase is significant,” Absa said, adding the business activity sub-index rose above 50 — the mark that reflects an overall improvement in business conditions for manufacturers — which “bodes well after a more subdued Q4”.
The business activity index lifted 5.3 points to 51.4, up from 46.1 in December, after three weak months.
New sales orders rose by ten points to 45.4, also a significant increase.
But exports slumped to their lowest since the height of Covid, suggesting that a surge in new orders was driven by domestic demand.
Export sales values are likely to have been negatively impacted by the stronger rand, it adds.
The index tracking expected business conditions in six months’ time edged lower from 68.8 to 66.4, though it remains nearly 10 points above the 2025 average.
SA’s manufacturing output was volatile last year, as US President Donald Trump’s tariff policies made the global economic backdrop highly uncertain.
Further, following a sharp decline in December, the inventories index returned to more normal levels and rebounded by 11.1 points to 47.2, up from 36.1 in December, albeit still below 50 points.
Additionally, after two months of remaining steady at 45, the supplier deliveries index rose by 10.5 points to 55.6, suggesting slower delivery times — often seen as a sign of improving demand.
The employment index rose to 43.9 from 39.9, but did not fully claw back earlier losses. It is below the other subindices in the headline PMI.
The purchasing price index edged higher in January to 52, up from 50, but remains near multi-year lows.
The stronger rand exchange rate should help import costs, with another big diesel price decline later this week also positive.
The early momentum from improving activity, easing input costs and stronger domestic demand are providing early momentum, Absa said.
A continued upward trend in orders and production will be key to sustaining this recovery.
Further, unlike in December, all subcomponents of the headline index looked better relative to the previous month, the bank adds.
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