South Africa: Absa Purchasing Managers' Index Dips in December, Signalling a Tepid Recovery in Manufacturing

analysis

The recovery in South Africa's manufacturing sector remains tepid, at best. The Absa Purchasing Managers' Index, one key barometer of the sector's health, declined in December. The only silver lining is that it remains in expansionary territory above the neutral 50 mark.

The Absa Purchasing Managers' Index (PMI) in December stumbled 3.1 points to 54.1, with all of the major subindices, bar the one for inventories, losing ground.

Worryingly, the business activity index fell almost five points into negative territory at 48.7.

"At 49.5 in 2021 Q4, the [business activity] index averaged well above the Covid third wave and riot-induced weak level [43.1] recorded in the third quarter. Even so, the Q4 average was still notably lower than the average of almost 57 points recorded in the second quarter of 2021," Absa said.

"This suggests that while actual manufacturing production showed post quarterly growth in 2021 Q4, the level of actual output is unlikely to fully recover from the stark losses experienced in the third quarter."

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