The seasonally adjusted Absa PMI fell by 4.5 points to 48.1 in November, down from 52.6 in October, signalling a loss of recovery momentum observed over the previous two months.
While this decline reflects the ongoing challenges faced by the manufacturing sector, fluctuations in the PMI throughout the year suggest this outcome is not entirely unexpected.
Key highlights from the November 2024 PMI include:
- Business activity decline: The business activity index dropped by 6.6 points to 49, marking a contraction in production levels.
- Weaker domestic demand: New sales orders decreased sharply to 45.9 from 54.8 in October. Respondents noted continued pressure on local demand despite some positive developments for consumers. However, export sales showed improvement due to sustained global demand.
- Mixed supplier performance: The supplier deliveries index remained stable compared to October but stayed below 50. This could reflect a combination of declining orders and improved logistical efficiency, such as easing port issues, but further analysis is needed.
- Employment pressures: The employment index declined by 2.5 points to 46.9, remaining in contractionary territory for the eighth consecutive month, as manufacturers continued to exercise caution with hiring decisions.
- Rising cost pressures: The purchasing price index increased by 1.7 points to 61.7, suggesting a potential slowdown in the downward trend of production costs. The weaker rand relative to October likely contributed to higher costs for imported materials.
- Business Optimism Holds: The index measuring expected business conditions in six months remained steady at 62.3, highlighting manufacturers’ continued confidence despite uncertain global and local economic conditions.
The November PMI results reflect the challenges facing South Africa’s manufacturing sector as volatile demand and cost pressures weigh on activity. While global demand offers some support, a weaker rand and domestic uncertainties continue to pose risks.