South African Factory Confidence Declines Due to Weak Demand and Supply Chain Issues

Sentiment among manufacturers in South Africa experienced a decrease for the second consecutive month in December, affected by soft domestic demand, declining export sales, and logistical challenges impacting various sectors.

The purchasing managers’ index (PMI) from Absa Group, developed in partnership with the Bureau for Economic Research, fell to 46.2 in December, down from 48.1 in November, as stated by the Johannesburg-based bank in a release on Wednesday.

The sub-index for business activity dropped to 40.3, marking its lowest level since August, while new sales orders also fell to 37.4, hitting the lowest point during that period.

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On a brighter note, the index reflecting expectations for business conditions in the next six months rose to 67.6, the highest figure since September.

“The December PMI results underscore the challenges facing South Africa’s manufacturing sector,” Absa emphasized. “However, the increase in future expectations suggests that manufacturers are hopeful for a possible recovery in 2025.”

Confidence waned despite the state-owned power utility’s success in maintaining a consistent power supply and the central bank’s decision to lower borrowing costs in late November, which raised optimism for increased consumer spending.

© 2025 Bloomberg

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