South Africa’s Manufacturing PMI Edges Higher but Remains in Contraction
The seasonally adjusted Absa Purchasing Managers’ Index (PMI) for March 2026 rose 1.6 points to 49.0, up from 47.4 in February. While the improvement is welcome, the headline reading stayed below the key 50-point neutral mark, signalling that South Africa’s manufacturing sector continues to struggle for sustained momentum. The modest gain was driven mainly by
South Africa’s Manufacturing PMI Edges Higher but Remains in Contraction
The seasonally adjusted Absa Purchasing Managers’ Index (PMI) for March 2026 rose 1.6 points to 49.0, up from 47.4 in February. While the improvement is welcome, the headline reading stayed below the key 50-point neutral mark, signalling that South Africa’s manufacturing sector continues to struggle for sustained momentum.
The modest gain was driven mainly by a slight 0.4-point rise in the business activity sub-index to 46.1. This marks the first-quarter average as stronger than the contracting final quarter of 2025, offering a cautiously positive start to the year. However, new sales orders weakened further, slipping 0.7 points to 44.5. Export orders deteriorated after a brief February uptick, with several respondents noting front-loaded March demand that could reverse in April.
Supply-chain pressures intensified sharply: the supplier deliveries index jumped 6.8 points to 62.1. Because the index is inverted, this points to significantly slower deliveries, more likely reflecting logistical bottlenecks and global disruptions than robust demand. Respondents flagged risks of further deterioration if geopolitical tensions — particularly around the Strait of Hormuz — continue to disrupt shipping.
Employment an Input Costs Subdue Confidence
While employment saw a rise of 0.8 points to 43.3, it remains subdued, staying deep in contractionary territory. The most alarming development was the surge in input costs. The purchasing prices index leapt 20.7 points to 75.8 — the highest level since early 2023 and the largest monthly jump since records began in 1999. The weaker rand and higher oil-derived input prices were the main culprits. With April’s fuel-price increases now in effect, cost pressures are expected to stay elevated, squeezing margins and feeding into broader inflation risks.
Compounding the concern, the forward-looking business confidence index (expectations for the next six months) plunged 22.9 points – the largest single-month drop on record.
Purchasing managers expressed deep unease about the combined impact of the Middle East conflict on both demand and costs.
While March 2026 delivered a marginal stabilisation rather than a meaningful recovery, demand remains fragile, with hiring conditions weak, and cost pressures intensifying at the worst possible time. Although the manufacturing sector has avoided a sharp deterioration so far, the collapse in confidence and persistent supply-chain fragility point to downside risks in the coming months. Without a swift improvement in new orders and relief on input costs, manufacturing will potentially remain a drag on South Africa’s broader economic recovery momentum.
Comparison between 2025 & 2026
Key Takeaways from the PMI March Data
- Demand (new sales orders) has deteriorated noticeably year-on-year.
- Cost pressures have intensified dramatically (+11.3 points), the biggest driver of margin squeeze.
- Hiring conditions have worsened further.
- Supply-chain delays have lengthened significantly compared with March 2025.
