Manufacturing shows signs of life as local demand picks up

Stephen Grootes speaks to ABSA economist Sello Sekele about the sharp rebound in the January PMI and what the improving domestic demand, easing input costs and weaker exports could mean for the manufacturing sector in the months ahead.

Listen to the interview in the audio player below.

The South African manufacturing sector felt a bit more upbeat in January, as demand from local customers started to improve.

A key measure of factory activity, the Absa Purchasing Managers’ Index (PMI), rose to 48.7 in January from 40.5 in December, according to data compiled by the Bureau for Economic Research.

That jump suggests conditions are getting better compared to the previous month.

However, the index is still below the 50 mark for the fourth month in a row. 

A mark above 50 indicates that manufacturing is growing, while a mark below 50 means it’s shrinking.

The Absa Purchasing Managers’ Index (PMI) is like a monthly health check for the manufacturing sector. It’s based on surveys of factory managers, who are asked whether things like orders, production, jobs and deliveries are getting better, worse or staying the same.

Speaking to Stephen Grootes on The Money Show, Absa economist Sello Sekele says while January’s reading shows improvement, being below 50 tells us the sector isn’t fully back on its feet yet.

"We'd like to see sustainable improvement before we can infer any stance to the sector. But look, the start to the year is good and we as Absa are expecting a good year in terms of economic growth."

- Sello Sekele, economist - Absa

"...because the rand strengthened a lot since the end of last year, now in terms of earnings it has had export earners. But at the same time, you have importers cheering because the rand ha improved a bit."

- Sello Sekele, economist - Absa

"Although you sore a bit of a tick up in the index that measures input costs in the manufacturing sector, it remains subdued thanks to the stronger rand."

- Sello Sekele, economist - Absa

"What manufacturers are expecting in about six months time, we saw a bit of a decline but in level terms we're seeing levels that are stronger than what we saw on average in 2025."

- Sello Sekele, economist - Absa

Scroll to the top of the article to listen to the full interview.