Absa PMI points to slower growth in South Africa's manufacturing sector

PMI reading drops to 51.9 in June, down from 54.3 in May

Slower growth attributed to supply chain disruptions and rising input costs

JOHANNESBURG, 6 July 2023 — The Absa Purchasing Managers' Index (PMI) for South Africa's manufacturing sector has declined to 51.9 in June, down from 54.3 in May. This indicates that the sector's growth has slowed in recent months.

The PMI is a measure of the health of the manufacturing sector, based on a survey of purchasing managers. A reading above 50 indicates that the sector is expanding, while a reading below 50 indicates that it is contracting.

The decline in the PMI reading is attributed to a number of factors, including supply chain disruptions and rising input costs.

• Supply chain disruptions: The ongoing COVID-19 pandemic has caused disruptions to global supply chains, which has made it difficult for manufacturers to get the raw materials and components they need.
• Rising input costs: The prices of raw materials and components have been rising in recent months, which has put pressure on manufacturers' margins.

The slowdown in the manufacturing sector is likely to have a negative impact on the South African economy as a whole. Manufacturing is a major contributor to GDP and employment, and a slowdown in the sector will lead to lower growth and job losses.

The Project Management Institute (PMI) has called on the government to take steps to address the supply chain disruptions and rising input costs that are affecting the manufacturing sector.

PMI has also recommended that the government invests in infrastructure and skills development to boost the manufacturing sector's competitiveness.

The government has said that it is committed to supporting the manufacturing sector and that it will work with the private sector to address the challenges that the sector is facing.