Another blow for employment in South Africa

 ·4 Feb 2025

South African manufacturers have taken a hit, with employment in the sector expected to take time to recover.

The seasonally adjusted Absa Purchasing Managers’ Index (PMI) started 2025 on the back foot, declining by 0.9 points to 45.3 points in January 2025.

This is the third straight contraction and the lowest level since August 2024.

“This suggests that the loss of momentum observed at the end of 2024 has not reversed at the start of the year,” said ABSA and the BER.

“However, it was encouraging that activity and demand improved from low levels – albeit remaining in
contractionary terrain.”

The business activity index improved by 3.2 points to 43.5 in January.

The slight improvement in activity comes amidst signs of recovering demand as the new sales orders rose from 37.4 in December to 42 points.

Export sales also recovered slightly. That said, the index remained below the November level.

Respondents flagged some issues that were hurting production and demand.

Although export sales recovered slightly, the index remained below the November level. Respondents also flagged some issues that were hurting production and demand.

This included trade disruptions with Mozambique due to political turmoil and fuel shortages affecting air freight.

The upcoming closure of ArcelorMittal’s Long business in SA was flagged as potentially impacting some producers over the next six to 12 months.

The closure is expected to affect 3,500 direct jobs, and have severe knock-on consequences for several sectors, such as the manufacturing sector.


Despite activity and orders rising, the other three components of the headline PMI declined.

The supplier deliveries index decreased by 6.1 points to 49.9 points, indicating that the delivery times are faster.

Although this could point to improved working supply chains, responses indicate that it is more likely linked to weaker demand for supplied goods.

The employment index also decreased by 2 points to 44.4 and remained in contractionary territory for the tenth consecutive month.

Employment contracted during the first 3 quarters of 2024 and the latest PMI suggests that it will take some time to recover.

The inventories index declined from 50.7 before to 46.5.

Reversing the sustained downward trend, the purchasing price index increased by 7.8 points to 68.2 in January.

“This was due to a weaker rand exchange rate and higher international oil prices, with a fuel price increase at the start of the month,” said Absa.

“Looking ahead, a further fuel price increase is expected in February.”

Renewed cost pressures could, in part, explain why the index tracking expected business conditions in six months dropped by 2.6 points to 64.9 in January.

Uncertainties about global trade dynamics could also be added to the drop, with US President Donald Trump implementing trade tariffs against several nations.

However, the current level indicates that manufacturers remain fairly optimistic about business conditions in the future despite the fall.

IndexOctNovDecJan
Business activity55.649.040.343.5
New sales orders54.845.937.442.0
Employment49.446.946.544.4
Inventories 54.650.650.746.5
Supplier deliveries48.748.356.049.9
Purchasing prices*60.061.760.468.2
*Inverted
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