Manufacturing industry sentiment shows slight improvement, still in contraction

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.

- YOGASHEN PILLAY

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.