Absa PMI drops to 48.1 in November, manufacturing suffers

The Absa Purchasing Managers’ Index (PMI) declined by 4.5 points in November.

A reading of 48.1 index points has been recorded, indicating a return to contractionary territory. This decline has been noted after two months of recovery in the manufacturing sector.

Business activity drops

Absa says the business activity index decreased by 6.6 points to 49. A decline in new sales orders has also been reported, with a reading of 45.9 points, down from 54.8 in October.

“Domestic demand has been cited as a key concern by respondents, despite some improvements in global demand.”

The supplier deliveries index has remained below 50, indicating ongoing logistical challenges. It is unclear whether this decline is due to decreased demand or improving logistical efficiency.

“Further analysis has been suggested to determine the underlying causes of this trend.”

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Manufacturing suffers

Employment in the manufacturing sector has been found to have continued to suffer. The employment index has been reported to have decreased by 2.5 points to 46.9. This marks the eighth consecutive month of contraction in employment.

“Inflationary pressures have been reported to have remained a concern. The purchasing price index has been found to have ticked up by 1.7 points to 61.7.”

This increase has been attributed to a weaker rand, which has driven up the cost of imported materials.

Challenges in manufacturing

Despite these challenges, manufacturers have been found to remain optimistic about future business conditions. The index measuring expected business conditions in six months’ time has been reported to have remained steady at 62.3.

The decline in the PMI has been noted to highlight the ongoing volatility in the manufacturing sector. “While some improvements in global demand have been reported, domestic demand has been found to remain a concern.”

Manufacturers have been advised to navigate these challenges in order to drive growth and recovery in the sector.

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