Latest news with #AbsaPMI
IOL News
14 hours ago
- Business
- IOL News
Manufacturing industry sentiment shows slight improvement, still in contraction
The Absa Purchasing Managers' Index (PMI) June 2025 released on Tuesday increased by 5.4 points to 48.5 in June 2025 but remained in contractionary territory for the eighth consecutive month.. Sentiment in the manufacturing industry in South Africa remained in the contractionary territory despite ticked up slightly in June, marking its second-highest reading of the year. Data from the Absa Purchasing Managers' Index (PMI) on Tuesday revealed a modest recovery in South Africa's economic landscape, with the index rising by 5.4 points to reach 48.5 in June from 43.1 in May. Despite this encouraging movement, the PMI indicated that the economy remained in contractionary territory for the eighth consecutive month., revealing the ongoing struggles facing the nation. Nonetheless, economists welcomed this increase, noting that the 5.4-point gain stood as the most significant rise since the 9-point jump recorded between August and September of 2024. Nkosiphindile Shange, economist at the Bureau for Economic Research, which conducts the PMI on behalf of Absa, said new sales orders increased by 7.8 points to 46.1 in June, signalling some recovery in demand. 'While export sales recovered somewhat in June relative to May, volumes remain near the lowest levels seen this year. This suggests that domestic demand boosted the large recovery in total new sales orders,' he said. 'However, the improvement in demand failed to boost production as the business activity index decreased by 1.5 points to 41.9 points in June.' In response to the uptick in orders, the supplier deliveries index also noted an increase, rising by 6 points to 55.1, which signals extended delivery times linked to heightened order volumes. Interestingly, there were no significant supply bottlenecks reported, implying that suppliers have coped with the heightened demand so far. On a more positive note, the employment index recorded a substantial jump of 9.7 points to 49.7, marking its highest level since March 2024. Despite this encouraging trend, economists cautioned that continued improvements are necessary before asserting that the manufacturing sector is on a path of recovery. The purchasing price index, indicating inflationary pressures, continued its downward trajectory, decreasing by 2.3 points to 58.1 in June. Economists noted that the stronger performance of the rand—averaging 40 cents firmer against the dollar throughout June—coupled with a decline in diesel prices earlier in the month, played a role in this positive movement. Professor Raymond Parsons, an economist from the North West University, said this was a positive but modest trend. Parsons said the priority now was to build on the incipient economic upturn in ways that guarantee a sustained recovery. 'Although higher in June 2025, the Absa PMI again, nonetheless, confirms that the SA economy is still struggling to gain momentum. By still being in negative territory for an eighth consecutive month, high-frequency data like the Absa PMI is still sending out mixed signals about the strength of the economic recovery,' Parsons said. Efficient Group chief economist, Dawie Roodt, said the problem with the South African economy was mainly growth, or lack thereof. 'We are flirting with recession; it's just not going anywhere at the moment. What we actually need is some sort of jolt, some sort of reaction from politicians to get the economy out of this situation,' Roodt said. 'The PMI illustrates this that it's a little better, but it's still in contractionary territory. It's not good; we need new policies and ideas for something different to get the economy growing.' Investec chief economist, Annabel Bishop, said the manufacturing sector's contraction was reflective of the insufficient capacity of the ports and rail to export out bulk commodities. 'Progress on improving Transnet's capacity, on both the rail and port sides to end the domestic freight crisis that weakens South Africa's growth rate, continues to be too slow, with both mining and manufacturing production contracting in Q1.25,' she said. 'Bouts of load shedding starting up this year signify insufficient electricity supply to consistently meet demand when planned and unplanned maintenance occurs, with the country's extremely aged electricity distribution system prone to breakdowns. 'In the main, while load shedding remains largely in abeyance, economic growth does put strain on the aged grid and limits the economy's growth beyond 1.0% y/y, with the PPP's planned to drive improved supply conditions yet to sufficiently occur.' BUSINESS REPORT
The Citizen
a day ago
- Business
- The Citizen
Absa PMI increases but in contractionary territory for eighth consecutive month
The PMI shows that South Africa's manufacturing sector can just not succeed in getting the numbers to make the economy grow. The Absa PMI increased in June by 5.4 points to 48.5, but the headline PMI remained in contractionary territory for the eighth consecutive month, although it is encouraging to note that the current level is the second highest in 2025 after the 48.7 points in March. The 5.4-point increase is also the highest increase since the 9-point jump between August and September last year. The Absa Purchasing Managers' Index (PMI) is an economic activity index based on a survey conducted by the Bureau for Economic Research (BER) and sponsored by Absa. On the positive side, new sales orders increased by 7.8 points to 46.1 in June, signalling some recovery in demand according to the BER. While export sales recovered somewhat in June compared to May, volumes remain near the lowest levels seen this year. The BER says this suggests that domestic demand boosted the large recovery in total new sales orders. However, the improvement in demand failed to boost production as the business activity index decreased by 1.5 points to 41.9 points in June. ALSO READ: Manufacturing PMI for April shows deteriorating SA economy Supplier deliveries and employment in Absa PMI increased The supplier deliveries index increased by 6 points to 55.1 in June. The BER says this indicates that the delivery times were extended due to some delays, possibly due to the uptick in orders and suppliers becoming busier, as respondents did not mention any significant supply bottlenecks. The employment index increased by 9.7 points in June, reaching 49.7 points, the highest since March 2024. The BER says this is a big jump for this index, but it needs to be sustained for some months before we can be confident that the manufacturing sector is adding jobs at a significant pace. The purchasing price index continued its downward trajectory, decreasing by 2.3 points to 58.1 in June. The BER points out that despite some volatility, the rand was on average 40c stronger to the dollar in June than in May and stayed below R18/$ for a large part of the month. On average, the Brent crude oil price was higher in June than in May, but the decline in diesel prices at the start of June likely helped. The index tracking expected business conditions in six months' time was unchanged at 62.5 points in June, after a significant 13.9 points increase in May. The BER says the apparent end to the 12-day war between Israel and Iran may have helped ease nerves, with no further news on the global tariff front. ALSO READ: PMI down slightly with concerns about global trade uncertainty Manufacturing activity remains weak Jee-A van der Linde, senior economist at Oxford Economics Africa, says despite the fact that South Africa's manufacturing PMI recovered partially in June driven by a mild improvement in demand, overall manufacturing activity remains weak, with the second-quarter PMI average lower on a quarterly basis at 45.4, below the previous quarter's 46.2. He says this suggests that a quarterly contraction in the manufacturing sector is also likely for the second quarter. Van der Linde also points out that despite the increase in the new sales orders index, his improvement failed to boost production as the business activity index declined and although the employment index increased strongly, it remains to be seen whether this momentum can be sustained and translate into sustainable job creation. This chart shows that the second quarter average of 45.4 is lower than the 46.2 average at the start of 2025: PMI must make up for poor performance in first quarter in second quarter He says, after a poor performance in the first quarter, the manufacturing sector must make up considerable ground in the second quarter. 'Although actual production increased by 1.9% compared to April, factory output levels were still 6.3% lower than last year, with the May manufacturing PMI number indicating activity remained sluggish due to muted demand. 'When factoring in the June PMI numbers, it is evident that the second-quarter average is lower than the preceding three-month period. This aligns with our overall view for the South African economy, which is that general activity is unlikely to have improved from the start of the year.' ALSO READ: SA business activity runs out of steam at end of 2024, but not all bad — PMI This table shows that despite a broad improvement in June, the PMI remains stuck in contractionary territory: Source: BER
Business Recorder
02-06-2025
- Business
- Business Recorder
South African rand gains before manufacturing PMI, vehicle sales data
JOHANNESBURG: The South African rand gained some ground against a weaker dollar in early trade on Monday, ahead of a purchasing managers' index (PMI) survey for the domestic manufacturing sector and vehicle sales figures. At 0602 GMT, the rand traded at 17.9475 against the dollar , about 0.2% firmer than Friday's closing level. The Absa PMI for May is set to be released at 0900 GMT and will shed light on manufacturing conditions in Africa's most industrialised economy. Local investors will then turn their focus to vehicle sales data due around 1200 GMT, giving a snapshot of consumer demand for big-ticket items. Nedbank economists said they expect annual growth in new vehicle sales to have accelerated from 11.9% in April to 20.4% in May, reflecting last year's low base and easing financial conditions due to interest rate cuts. South African rand falls back after strong gains The dollar last traded about 0.2% weaker against a basket of currencies as U.S.-China trade tensions continued to simmer and investors turned defensive ahead of U.S. jobs data. South Africa's benchmark 2035 government bond was little changed in early deals, with the yield up 0.5 basis points at 10.16%.
Reuters
03-03-2025
- Business
- Reuters
South African rand firms ahead of manufacturing PMI
JOHANNESBURG, March 3 (Reuters) - South Africa's rand firmed early on Monday, ahead of a purchasing managers' index (PMI) survey for the domestic manufacturing sector. At 0725 GMT, the rand traded at 18.66 against the U.S. dollar , about 0.3% stronger than its previous close. The Absa PMI for February is set to be released at 0900 GMT and will shed light on manufacturing conditions in Africa's most industrialised economy. The dollar was little changed against a basket of currencies as investors processed U.S. President Donald Trump's , the delay in finding peace in Ukraine and the prospect of a weaker U.S. economy. Analysts said the rand will continue to take its direction from the broader movements of the dollar for the time being. On the Johannesburg Stock Exchange, the blue-chip Top-40 (.JTOPI), opens new tab index last traded up about 0.9%. South Africa's benchmark 2030 government bond was weaker in early deals, with the yield up 3 basis points to 9.175%.
