Post by : Saif Rahman

The manufacturing landscape in South Africa experienced a significant downturn in November, as revealed by a key monthly survey that recorded the steepest decline in business sentiment this year. The most recent purchasing managers’ index (PMI), published on Monday, highlights concerns for this crucial sector.

According to the seasonally adjusted PMI from Absa bank, the index dropped to 42.0 in November from 49.2 in October. A figure under 50 signifies a contraction in activity, indicating a notable and sudden deterioration in factory conditions. This trend exacerbates the challenges faced by manufacturers grappling with sluggish demand, escalated costs, and an unpredictable economic climate.

Absa emphasized that November’s data underscores the precarious nature of South Africa’s manufacturing setting. Both demand and production — essential indicators of industrial health — further declined, overshadowing minor gains in employment and signs of easing cost pressures. In essence, while factories brought on slightly more workers and faced reduced costs for some materials, these positive developments did little to uplift overall sentiment.

South Africa's reliance on exports remains a concern, particularly as demand weakened since late 2024. Variations in global market demands, unreliable shipping routes, and competition from lower-priced international products hamper the ability of South African firms to market their goods abroad. Concurrently, domestic demand has regressed once more after a brief resurgence during the third quarter of 2025. Decreased purchases from local consumers and businesses lead to diminished orders for factories, subsequently affecting output levels.

Nevertheless, there exists a glimmer of hope. A sub-index tracking forecasted business conditions for the next six months climbed to 50.8, indicating tentative optimism. Although it slightly surpasses the neutral threshold of 50, this number remains below the historical average, suggesting that while manufacturers see potential for improvement, confidence for a substantial recovery is still lacking.

As a crucial pillar of South Africa’s economy, the manufacturing sector has faced continued challenges over the years. Issues such as load-shedding, high operational costs, weak international demand, and infrastructural setbacks plague the industry. The drop in the November PMI serves as yet another reminder of the slow and uncertain path toward recovery.

As the year-end approaches, stakeholders watch closely to see if external demand improves and whether government economic initiatives can bolster local manufacturing. For the time being, manufacturers remain cautious, understanding that the forthcoming months are pivotal for stability and growth.

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