The seasonally adjusted Absa PMI increased by 0.9 points to 49.6 in October, from a revised 48.7 in September, marking a second consecutive monthly improvement.
Encouragingly, all five components of the headline index recorded gains during the month. However, the PMI remained marginally below the neutral 50-point mark, indicating that manufacturing conditions have yet to return to expansionary territory.
While production and new sales orders have recovered some ground from their August lows, the improvement remains uneven.
Employment continues to signal weakness, while renewed purchasing-price pressures and deteriorating expectations suggest manufacturers remain cautious about the sustainability of the recovery.
Key highlights from the October 2026 PMI include:
- Business activity edges higher but remains subdued: The business activity index increased from 47.7 to 48.6 in October, building on the more substantial recovery recorded in September. Although activity continued to improve from August’s low of 41.5, it remained below the neutral 50-point mark, indicating that factory production conditions are still under pressure. The gradual improvement suggests that manufacturers are recovering some lost ground, although a sustained increase in activity will be needed before the sector can be said to have returned to growth.
- New sales orders improve for a second consecutive month: The new sales orders index increased from 45.4 to 46.8, marking a second consecutive monthly improvement. Encouragingly, export sales also strengthened, reaching their highest level since early 2025 and approaching the neutral 50-point mark. This suggests some easing in external demand pressures, although export orders have not yet returned to expansionary territory. Respondents continued to highlight challenging domestic trading conditions, with customers remaining under pressure. The improvement in orders is encouraging, but demand remains insufficient to support a sustained recovery in manufacturing activity.
- Employment improves slightly but remains weak: The employment index edged up from 42.8 to 44.2, partially reversing September’s decline. However, the index remained firmly below the neutral 50-point mark, suggesting that manufacturers continue to reduce employment levels. Despite modest improvements in production and new orders, firms appear reluctant to increase staffing while demand conditions remain subdued. This highlights the gap between improving manufacturing indicators and a recovery strong enough to support employment growth.
- Inventories return to expansionary territory: The inventories index increased marginally from 49.7 to 50.4, moving back above the neutral 50-point mark. Order backlogs also improved slightly, although they remained at relatively low levels. While the increase in inventories may reflect some improvement in purchasing activity, subdued new orders and limited backlogs suggest that manufacturers are not yet experiencing a broad-based recovery in production demand.
- Logistics constraints continue to disrupt manufacturing: The supplier deliveries index remained virtually unchanged at 58.1, compared with 58.0 in September. While a reading above 50 indicates longer delivery times, the elevated index does not necessarily reflect stronger demand. Respondents continued to highlight persistent logistical disruptions, particularly at Durban harbour, as a significant contributor to delays. Some manufacturers also reported shortages of imported inputs and interruptions to production as a result of these constraints, underscoring the continued pressure on manufacturing supply chains.
- Input cost pressures intensify further: The purchasing price index increased from 71.1 to 73.7, extending the acceleration in cost pressures recorded in September. The sharp increase in domestic fuel prices at the beginning of October likely contributed to the rise, alongside a somewhat weaker rand, which added pressure to imported input costs. Some relief is expected in November following the temporary fuel-levy reductions announced in the Medium-Term Budget Policy Statement. However, the anticipated reductions reflect temporary levy relief rather than an easing in underlying fuel-price pressures.
- Business confidence weakens despite improving activity: The index tracking expected business conditions in six months’ time declined from 55.3 to 51.7, reversing some of the improvement recorded since July. Although the index remained marginally above the neutral 50-point mark, the deterioration suggests that manufacturers have become more cautious about the outlook. Respondents highlighted uncertainty surrounding the upcoming local government elections, persistent logistics and infrastructure constraints, and continued pressure on domestic demand as key concerns.
The October PMI results suggest that South Africa’s manufacturing sector is gradually recovering from the weakness experienced earlier in the year. All the components of the headline index improved and stronger export sales provided some relief against subdued domestic demand.
However, the recovery remains fragile. Business activity and new orders continue to signal contraction, manufacturers remain reluctant to increase employment, and persistent logistics challenges and rising input costs are placing additional pressure on operating conditions.
The deterioration in six-month business expectations also suggests that manufacturers remain cautious about the sustainability of recent improvements. A sustained recovery in demand and production, supported by easing cost pressures, will be important in determining whether the sector can move decisively back into expansionary territory.