SA manufacturing activity steady in October

South Africa's manufacturing sector continues to show resilience, with the ABSA Purchasing Managers' Index (PMI) printing at 52.6 points in October, slightly lower than the revised 53.3 in September. Despite the slight dip, sentiment remains positive as the sector stays in expansion territory. Some of the key highlights for the month included purchasing prices falling to their lowest levels since 2018. The business outlook, although slipping from a three-year high, remains positive at 62.7. Sello Sekele, an Economist at Absa CIB, provided insights into the current state of the manufacturing sector and its outlook for the months ahead. Sekele highlighted the consecutive months above the 50-point mark as a positive sign, indicating growth in business activity and new sales orders. One significant aspect of the latest PMI numbers is the moderation in the business outlook index, which, while still strong at 62.7, saw a decline from its three-year peak. Sekele attributed this dip to factors such as potential fuel price hikes in November and global uncertainties, including the upcoming US elections. Despite these challenges, he emphasized that the positive factors at play, such as stimulus measures in China, renewed infrastructure projects in South Africa, and the ongoing interest rate cuts, create a favorable environment for the manufacturing sector. Looking ahead, Sekele cautioned about the employment outlook, which remains subdued. He noted that manufacturers are likely to respond cautiously to the current employment scenario, waiting for sustained robust activity in the sector before increasing their workforce. The external factors, such as the global economic conditions and trade policies, especially in light of the US elections, play a crucial role in shaping manufacturers' confidence and decision-making. South Africa's dependency on China's performance, particularly in terms of exports, also adds to the overall sentiment. With interest rates on a downward trend and inflation easing, the groundwork seems favorable for the sector and the economy to thrive in the coming months. While uncertainties and cautions persist, the overall sentiment in South Africa's manufacturing sector remains positive, highlighting the sector's resilience in the face of challenges. As the global economic landscape evolves, manufacturers will continue to adapt and make strategic decisions to navigate through the uncertainties and capitalize on the opportunities that lie ahead.