Johannersburg — South Africa's manufacturing sector showed signs of recovery in September as new orders rebounded, lifting factory activity back into expansion territory after three consecutive months of contraction.

The seasonally adjusted Purchasing Managers’ Index (PMI), sponsored by Absa, rose to 50.7 points in September from 45.8 in August, crossing the 50-point threshold that separates expansion from contraction for the first time since May.

The improvement was largely driven by a strong recovery in new orders. The new sales orders index jumped to 50.8 from 40.3, while the business activity index climbed to 49.3 from 40.2, recovering much of the sharp decline recorded in August.

Absa described the September performance as a welcome improvement following a weak winter period, particularly highlighting the sharp rebound in new orders.

However, the recovery remains uneven.

Actual business activity remained just below the neutral 50-point level, while employment weakened and order backlogs remained subdued. Manufacturers also continued to face logistical challenges, with shipping delays at Durban port identified as a persistent bottleneck.

At the same time, input cost pressures intensified during the month, adding to the challenges facing South African manufacturers.

Despite these pressures, manufacturers became slightly more optimistic about the months ahead. The index measuring expected business conditions over the next six months increased to 55.3 from 54.7.

The September PMI suggests that South Africa’s manufacturing sector may be beginning to regain momentum, although sustained growth will depend on improvements in logistics, demand, employment and production costs.

Source:Reuters

Reporting :Sfundo Parakozov

Editing :Alexander Winning

Why it matters

The improvement in South Africa’s manufacturing PMI signals that factory activity may be beginning to recover after a weak winter period. A sustained recovery could support economic growth and business confidence, but ongoing port delays, higher input costs and weaker employment show that manufacturers still face significant constraints.

The rebound in new orders is particularly important because stronger demand can translate into increased production and, eventually, greater investment and hiring. However, with actual business activity still below the expansion threshold, the September improvement will need to be sustained in the coming months before it can be viewed as a broader manufacturing recovery.