Absa PMI rises to 50.7 as manufacturing employment weakens

South Africa’s Absa Purchasing Managers’ Index rose to 50.7 in September from 45.8 in August, moving above the neutral 50-point mark for the first time in four months, although employment weakened and shipping delays lifted the headline reading.

The Bureau for Economic Research released the seasonally adjusted September results at 11:00 on Thursday, 1 October. The 4.9-point increase ended three months below 50.

The survey asks manufacturers whether conditions have improved, deteriorated or stayed the same compared with the previous month. A reading above 50 indicates an increase, while one below 50 indicates a decrease.

New sales orders increased to 50.8 from 40.3. Business activity rose to 49.3 from 40.2, recovering much of August’s decline but remaining below the neutral level.

The employment index moved in the opposite direction, falling to 43.1 from 46.2 and almost reversing its August improvement. The BER said the gains in orders and activity had not yet been strong or sustained enough to change manufacturers’ cautious approach to hiring.

Delivery bottlenecks complicated the overall result. Respondents reported longer shipping times, delays in clearing containers at Durban harbour and higher freight costs.

The supplier-deliveries index was 58.4, compared with 58.6 in August. Slower deliveries can accompany strong demand, but the BER said logistics disruptions were an important driver in September. The elevated reading therefore helped raise the headline PMI without necessarily reflecting stronger demand.

The purchasing-price index increased by 3.9 points to 71.1 as firms reported higher transport, logistics and other input costs. September’s domestic fuel-price increases added to the pressure, according to the report.

Inventories rose to 52.2 from 43.6. The BER said some businesses could be rebuilding stocks or preparing for seasonal demand, but subdued order backlogs meant this did not yet establish a broad rise in demand.

The index measuring expected business conditions in six months edged up by 0.6 points to 55.3. The BER said a sustained run above 50 in the headline PMI would provide firmer evidence of a manufacturing recovery.