The manufacturing sector’s performance remains under pressure.
The Absa Purchasing Managers’ Index (PMI) decreased by 1.6 points to 49.2 points in October 2025, returning to contractionary territory after showing growth for a month.
Absa PMI is an economic activity index based on a survey conducted by the Bureau for Economic Research (BER) and sponsored by Absa. It measures the health of South Africa’s manufacturing sector.
The survey, released on Monday, found that for October the manufacturing sector’s performance remains under pressure, with respondents commenting that domestic demand is quieter than usual this time of the year. On the export front, demand is also sluggish, complicated by the rise in US trade tariffs and logistical challenges.
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PMI Manufacturing starts at a weaker note
Jee-A van der Linde, senior economist from Oxford Economics, said the drop in South Africa’s manufacturing PMI at the start of fourth quarter of 2025 aligns with their view that the economic impact of higher US tariffs is filtering through with a lag.
“September’s demand gains were reversed after business activity slowed sharply, with the new sales orders index also recording a chunky decline,” he said. The PMI highlighted that sales orders have contracted for eight of the 10 months this year, indicating that the economy remains under pressure and demand remains subdued.
“Respondents noted that domestic demand is quieter than usual for this time of year, while export demand remains sluggish owing to higher US trade tariffs and domestic logistical constraints.”
Business activity in PMI
The PMI revealed the business activity index decreased by 5 points to 49.4 in October, slipping back into contractionary territory for nine of the 10 months in 2025. However, October activity remains the second-highest reading for 2025, following 54.4 points in September.
The supplier deliveries index decreased by 1.4 points to 53.5 in September. It remains to be seen whether this decrease (signalling faster delivery times as the index is inverted) is due to the contraction in new orders or recent news of a better-performing port in KwaZulu-Natal.
The employment index increased by 2.2 points in October, reaching 45.1, stuck in contractionary territory since April 2024. This follows a 4.9 contraction in September.
“As demand remains subdued, activity remains volatile and minor improvements are not sustained, manufacturers are reluctant to increase staff levels,” reads the Index.
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Mixed movements in fuel price
Van der Linde noted that the purchasing price index edged up to 61.9 in October, reflecting mixed movements in the fuel price during the month.
“That said, the general price outlook remains favourable, underpinned by expectations of a strong rand and subdued oil prices,” he added.
“Although the employment index recorded the largest month-on-month increase, it has remained in contractionary territory for 19 consecutive months.”
He said it is concerning that the index tracking expected business conditions six months from now fell deeper into contractionary territory (46.1), marking the lowest level since 48.6 points in April 2025.
“This is consistent with our view that US tariffs will have a delayed impact on the economy. We still believe that the country’s manufacturing sector outlook has dimmed due to US tariffs, particularly given that the country’s merchandise exports to the US are generally more diversified and comprise higher value-added goods.”
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