The Absa Purchasing Managers’ Index (PMI) for January 2026 reflects a rebound in manufacturing sentiment after a sharp contraction at the end of 2025.
The seasonally adjusted PMI rose by 8.2 points to 48.7 in January, marking a significant recovery from December’s slump. While still below the neutral 50-point mark, the size of the improvement is notable and suggests a potential reset in production momentum entering the first quarter of the year.
Key highlights from the January 2026 PMI include:
- Business activity returns to growth: The business activity index increased by 5.3 points to 51.4, breaking above the 50-point level for the first time in four months. The improvement follows a subdued Q4 and may reflect a reacceleration in manufacturing production, even though December’s official data is still pending.
- New sales orders surge on domestic demand: New sales orders climbed by 10.0 points to 45.4 in January. Although still below the neutral mark, this represents a meaningful improvement. Notably, the increase was driven entirely by domestic demand, as export sales continued to weaken and dropped to their lowest level since the height of the Covid-19 pandemic, likely weighed down by the stronger rand.
- Inventories and supplier deliveries recover: Following a sharp drop in December, the inventories index rebounded by 11.1 points to 47.2, returning to more typical levels. Meanwhile, the supplier deliveries index rose 10.5 points to 55.6, suggesting slower delivery times, often interpreted as a sign of improving demand and supply chain activity.
- Employment improves marginally: The employment index recovered partially from its December fall, increasing by 4.0 points to 43.9. While still well below 50, the reading is in line with the pattern where employment lags improvements in output.
- Cost pressures remain muted: The purchasing price index edged up by 2.1 points to 52.1, but remained near multi-year lows. A stronger rand and lower fuel costs, particularly diesel, contributed to a more favourable cost environment. The apparent disconnect between the PMI and the producer price index (PPI) is attributed to sectoral weighting differences.
- Outlook remains optimistic: The index tracking expected business conditions in six months’ time eased slightly, dipping from 68.8 to 66.4, but remains nearly 10 points above the 2025 average. This points to cautious optimism among manufacturers for a meaningful recovery, even as order confirmation remains subdued relative to quotes issued.
The January PMI results suggest that 2026 has started on a more hopeful note. While the headline index remains below 50, signs of improving activity, easing input costs, and stronger domestic demand provide early momentum. A continued upward trend in orders and production will be key to sustaining this recovery.