January’s business activity in manufacturing drops to 43.6

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The Purchasing Managers’ Index (PMI) indicates a challenging start to the year for the local manufacturing sector.

The index measures the prevailing direction of business activity in manufacturing in South Africa.

Absa’s monthly PMI recorded the headline figure at 43.6 for January 2024, down from 50.9 in December.

This is attributed to a sharp deterioration in demand and activity.

Outside the global financial crisis in 2008-2009 and the COVID-19 pandemic-induced lockdown period of 2020, the index has only fallen to this low level a handful of times.

A decline in global growth prospects could adversely affect domestic manufacturing this year.

ABSA CIB Economist, Sello Sekele says, “When you look closer to home in South Africa, things are also looking rosy. You are looking at a situation where business is also struggling due to a number of factors mainly as a result of a lack of structural reforms that lift business confidence in a way that we see investment creating the growth that we need. So manufacturers are faced with headwinds both from the international side and domestic side.”

Below is the full interview with Seleke: