PMI increases by four points, analysts say it is not enough

The Absa Purchasing Managers’ Index (PMI) increased by 4% to 48.7 in March 2025, which reflects positive changes in the manufacturing sector.

However, Oxford Economics says the collective performance for Q1 2025 is not enough to suggest a sectoral rebound at the start of this year.

“Demand for South African manufactured goods remains weak, while an uncertain global economic outlook is also constraining activity,” says Jee-A van der Linde, Senior Economist at Oxford Economics.

Why the PMI increase is not enough

She adds that the index tracking expected business conditions in six months’ time declined further to 58 in March, dipping below 60 for the first time since May 2024 (57.6).

The return of load shedding and strained SA-US relations, in the wake of heightened tariff uncertainty, were likely the factors that influenced manufacturers the most during the latest survey.

“The average for Q1 2025 stands at 46.2, down from the Q4 2024 reading of 49.0. This suggests a quarterly contraction in the manufacturing sector in the first quarter of this year is likely.”

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Business activity

The index shows that business activity increased by 7.7 points to 48.3 in March in response to improved demand.

New sales orders increased by 10.2 points to 48.7 points in March, as a turnaround in export sales boosted demand recovery.

“The index tracking export sales showed significant gains in the export markets, with sales returning to expansionary territory for the first time in four months.

“This is despite the current global trade disagreements and logistical issues. Comments from respondents indicate that logistical issues at the ports remain, and souring relations with the biggest economy in the world are bringing uncertainty, although it may not be affecting trade at the moment.”

Supplier deliveries index

The PMI also show that the supplier deliveries index decreased slightly by 0.8 points to 54.1 points, indicating some improvement in delivery times (as the index is inversed, with an increase in delivery times resulting in a decline in the index).

While the slight improvement could be welcome if driven by better-working supply chains, it could also reflect sustained weaker demand.

The employment index increased by 3.9 points to 46.1 but remained in contractionary territory for an entire year (12 months since April 2024).

Finally, the inventories index ticked to 45.9 in March as manufacturers reduced the stock of finished goods and raw materials, possibly with activity still slow to recover.

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