South African Manufacturing Slips Back into Contraction: Absa

South Africa’s seasonally adjusted Absa Purchasing Managers’ Index (PMI) dropped to 47.3 in June 2026 from 50.8 in May, signaling renewed contraction in factory activity after two consecutive months of growth. This mainly reflected weaker demand, which weighed on new orders. Clients reportedly placed fewer orders as some customers delayed purchases in anticipation of lower prices, weighing on new business even as cost pressures eased. Nevertheless, confidence about future business conditions improved strongly amid lower oil prices. Absa said the survey was conducted after the US and Iran agreed an interim deal to end the conflict and reopen the Strait of Hormuz, which prompted a pullback in global oil prices. It added that a sharp decline in the PMI purchasing price component suggested April and May may have marked the peak of price pressures.

South Africa’s seasonally adjusted Absa Purchasing Managers’ Index (PMI) fell to 50.8 in May 2026 from 52.6 in the prior month, pointing to a second consecutive month of expansion, albeit significantly below April’s robust increase. The slowdown reflected fading demand brought forward in April, weaker new orders, and higher input costs driven by a softer rand and rising oil prices. Production moved back into contraction, with the index falling to 43.5 from 52.8. New sales orders also declined, slipping to 44.6 from 52.9. The index tracking expected business conditions in six months rose to 52.9 from 47.4 in the prior month.

South Africa’s seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose to 52.6 in April 2026 from 49 in March, signaling a renewed expansion in factory activity for the first time since last September. Activity grew at its fastest pace since October 2024, driven by a rebound in output and new orders amid stronger domestic demand, while exports declined. "Some respondents indicated that orders may have been brought forward in anticipation of further cost increases, potentially resulting in weaker demand in the months ahead,” Absa noted. Meanwhile, input costs picked up amid a weaker rand and higher international oil prices linked to the Middle East war. “Elevated input costs are likely to squeeze profit margins and could limit the sustainability of the recent improvement in activity,” the bank said, adding that they may also add to inflationary pressures. Lastly, the sub-index tracking expected business conditions edged up but stayed below 50, underscoring subdued confidence.