South Africa Manufacturing Sentiment Improves in January Despite Export Weakness

A gauge of South African manufacturing sentiment showed a notable improvement in January, supported by a rebound in business activity, although weak export performance continued to weigh on overall conditions, a purchasing managers’ index survey showed on Monday.

The seasonally adjusted purchasing managers’ index sponsored by Absa rose to 48.7 points in January from 40.5 in December. While the index remains below the 50 point threshold that signals expansion, the sharp increase suggests that operating conditions in the manufacturing sector are stabilising after a difficult end to the year.

Survey respondents reported stronger production levels and improved domestic demand, with new orders recovering as businesses resumed activity after the holiday period. The pickup in output also helped to support employment levels, with some firms indicating they had slowed the pace of job cuts compared with previous months.

However, export orders remained a key drag on the headline index. Manufacturers cited weak demand from major trading partners, ongoing global economic uncertainty, and logistical challenges as factors limiting export growth. Persistent problems at ports and high transport costs were also flagged as constraints on competitiveness.

Input costs showed mixed signals, with some easing in price pressures linked to softer commodity prices and a relatively stable rand, while others pointed to continued increases in electricity, fuel and compliance costs. Business confidence improved modestly, but many firms remained cautious about the outlook, noting concerns around energy supply reliability, global growth prospects and policy uncertainty.

Economists said the January PMI reading suggests the manufacturing sector may be past its worst, but warned that a sustained recovery would depend on stronger external demand and improvements in domestic infrastructure and energy availability. Until the index moves decisively above 50, the sector is likely to remain under pressure, even as conditions gradually improve.