The seasonally adjusted ABSA Purchasing Managers’ Index (PMI) declined by 1.6 points to 43.1 in May, marking a seventh consecutive month in contractionary territory and suggesting ongoing weakness in the manufacturing sector, despite some tentative signs of recovery in domestic demand.
Key highlights from the May 2025 PMI include:
- Business conditions outlook improves sharply: The index tracking expected business conditions in six months’ time surged by 13.9 points to 62.5 – the highest level since end-2024. Sentiment was boosted by the suspension of global tariffs and renewed optimism that local political disagreements on policy would be resolved.
- Business activity picks up slightly: The business activity index increased by 3.4 points to 43.4, signalling marginal improvement in output, but still remaining below the neutral 50-point mark.
- New sales orders edge higher: New sales orders rose by 2.2 points to 38.3. The slight rebound likely reflects recovering domestic demand, although export sales continued to deteriorate at a concerning pace.
- Supplier delivery times improve – but for the wrong reasons: The supplier deliveries index declined, indicating faster delivery times. While this could signal easing logistical constraints, respondents suggest the decline is due to lower demand rather than improved efficiency, making this a negative signal under current conditions.
- Cost pressures ease significantly: The purchasing price index dropped by 7.9 points to 60.4, largely due to fuel price cuts at the start of May. A stronger rand and lower Brent crude prices helped offset the impact of a fuel levy increase, with further relief expected in June.
The May PMI results underscore the fragile state of South Africa’s manufacturing sector. While forward-looking sentiment has improved, underlying demand and activity levels remain weak, and structural logistical challenges persist.