Following the contraction in August, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) increased significantly by 9.2 points to 52.8 in September, up from 43.6 in August.
This bounce indicates improved conditions, driven by stronger demand, easing inflationary pressures, and a more favourable business environment.
Despite recent volatility in both PMI and official manufacturing data, the positive outlook for Q3 brings renewed optimism.
Key highlights from the September 2024 PMI include:
- Business Activity Recovery: The business activity index surged by 11.8 points to 50.7, reversing the prior month’s contraction, reflecting a resurgence in production levels.
- Improved Demand: New sales orders increased by 18.5 points to 53.1, with both domestic and export markets contributing to the uptick. Export demand, in particular, saw growth for the third consecutive month, signaling a gradual recovery in global trade dynamics.
- Supplier Performance: The supplier deliveries index decreased by 2.5 points, indicating better performance (since this index is inversed), with suppliers adapting well to increased activity levels.
- Employment Index: The employment index rose by 6.8 points to 48.9, but remained in contractionary territory. Manufacturers are cautious with employment decisions amid recent volatility, and sustained production improvements are needed to drive job growth.
- Cost Pressures Easing: The purchasing price index fell to 61 points, marking the lowest level in 2024 and signaling relief from rising input costs. Declining crude oil prices and fuel cuts further contributed to the softening of production costs, bolstered by a relatively stronger currency.
- Business Outlook: The index tracking expected business conditions in six months jumped to 70.8 points, from 61.3 in August, the highest since January 2021. This strong sentiment indicates optimism for a more sustained recovery in the months ahead.
The positive PMI results suggest that the manufacturing sector is stabilising after a turbulent period, although challenges remain, particularly in employment. The sustained improvement in production and easing cost pressures point to a favourable outlook, supported by ongoing policy adjustments and stronger external demand.