SA’s manufacturing sector ends 2024 on weak note

South Africa's manufacturing sector ended 2024 on a weak note, with the seasonally adjusted Absa Purchasing Managers' Index (PMI) declining by 1.9 points to 46.2 points in December, remaining in contractionary territory. This puts the fourth quarter average PMI at 49 points, which is not significantly different from the 49.8 points seen in the third quarter, but it is above the figures seen in both the first and second quarters. Andiswa Nondudule, an Economist at ABSA CIB, shared insights on the recent numbers. She noted that there has been a lot of volatility within the manufacturing sector throughout 2024, making it challenging to identify a clear trend within the data. The global manufacturing sector is also experiencing challenges, with PMIs in the US, UK, and Eurozone hovering below the 50 neutral mark, indicating a general slowdown in manufacturing activities worldwide. The respondents in the survey highlighted that the conditions in December 2024 were worse than usual for that time of the year. The weak performance in December could be attributed to the state of the consumer and the overall economic situation in the country. Despite expectations for an increase in purchasing prices due to a weaker Rand exchange rate and higher petrol prices in December, the purchasing price index fell by 1.3 points. This surprising decline suggests that other input costs may have decreased during the month. While the PMI declined in December driven by lower activity levels and demand, a positive outcome was the slight decrease in prices. Manufacturers remain optimistic about the future, a sentiment that is common at the year-end as firms look ahead to the new year. Looking forward, the South African Reserve Bank (SARB) will likely keep a close eye on the CPI data and PMI releases to assess economic growth and inflation trends. Despite ending 2024 on a sour note, there is hope for a turnaround in 2025. Manufacturers are anticipating improved conditions, and there is cautious optimism for growth in the new year. As South Africa navigates through economic challenges, the manufacturing sector's performance will play a crucial role in shaping the country's overall economic outlook for 2025.