The seasonally adjusted PMI declined by 3.5 points to 47.3 in June, returning below the neutral 50-point mark after remaining in expansionary territory during April and May.
The decline reflects softer demand conditions across the manufacturing sector, although easing geopolitical tensions helped ease input cost pressures and improve manufacturers’ expectations for the months ahead.
Key highlights from the April 2026 PMI include:
- Business Activity Improves Slightly but Remains in Contraction: The business activity index increased modestly from 43.5 in May to 45.6 in June. While activity improved during the month, it remained below the neutral 50-point mark. Despite recent volatility, the average business activity index for the second quarter was broadly unchanged from the first quarter, when official manufacturing production contracted, suggesting output likely remained under pressure for a second consecutive quarter.
- New Sales Orders Decline Further: The new sales orders index fell from 44.6 to 40.6, marking a second consecutive monthly decline after reaching a high of 52.9 in April. Respondents indicated that some customers are delaying purchases in anticipation of lower prices following the easing in oil prices and fuel costs. This reversal follows the front-loaded demand seen earlier in the second quarter.
- Inventories Fall Back Below Neutral: Manufacturers’ own inventory levels declined from 55.8 to 49.0, falling below the neutral level after two consecutive months above 50. Purchasing managers appear to be delaying restocking, expecting further declines in input prices following the easing of tensions in the Middle East and lower Brent crude oil prices.
- Supplier Deliveries Remain Elevated: The supplier deliveries index eased slightly to 60.0 from 61.6 in May. As the index is inverted, the elevated reading continues to indicate slower-than-normal deliveries. Despite the easing of geopolitical tensions, supply chains have yet to fully normalise and logistical pressures remain evident.
- Employment Weakens Again: The employment index declined sharply from 48.4 to 41.4, reversing the gains made in May. This suggests manufacturers remain cautious about hiring amid weak demand conditions and continued uncertainty regarding the pace of the recovery.
- Input Cost Pressures Ease Significantly: The purchasing price index declined by 13.5 points to 71.3, representing the largest monthly easing in recent months. Lower Brent crude oil prices, a relatively stronger rand and diesel price reductions all contributed to slower input cost inflation. This suggests that April and May likely represented the peak in manufacturing price pressures.
- Business Confidence Improves: The index tracking expected business conditions six months ahead increased from 52.9 to 56.6, reflecting improved confidence following the easing of Middle East tensions. Nevertheless, respondents continued to highlight domestic uncertainty, including the June 30 protests, as a risk to business activity.
The June PMI results suggest that South Africa’s manufacturing sector lost momentum at the end of the second quarter as weaker demand pushed the headline index back into contractionary territory.
Encouragingly, easing oil prices and lower fuel costs have provided meaningful relief to manufacturers’ input costs, while expectations for business conditions have improved.
However, sustained weakness in demand and employment suggests that the sector is likely to remain under pressure in the n