The South African manufacturing purchasing manager’s index (PMI) jumped in April to 52.6 from 49.0 in March and 47.7 in February.
This was the first time since September 2025 that the Bureau for Economic Research (BER) PMI rose above the neutral 50-point mark.
Additionally, this confirmed the rise in the S&P Global South Africa PMI. This rose to 50.8 in March from 50.0 in February. This was the first upturn in business conditions for six months.
April components
The April improvement was due to a rebound in both business activity and new sales orders. This may be due to front-loading of demand ahead of expected price increases and supply disruptions.
Something similar happened in March 2022 after the Russian invasion of Ukraine in February 2022. Then the business activity index rose to 60.5 from 59.6 in February, while the new sales orders index jumped to 61.7 from 56.9.
This time the business activity index rose to 52.8 in April from 46.1 in March. The new sales orders index jumped to 52.9 from 44.5.
The BER said that the new sales orders index appears to have been driven primarily by stronger domestic demand, while export sales declined. This divergence suggests that the recovery is not broad-based and remains vulnerable to external headwinds.
Front-loading
The front-loading was also evident in the inventories index. It moved above the neutral 50-point mark for the first time since August 2025. This probably reflected “just-in-case” inventory building behaviour, with firms purchasing inputs ahead of expected price increases and/or supply disruptions.
The South African Reserve Bank reported that the inventory to gross domestic product (GDP) ratio fell to a record low of 5.1% in the fourth quarter 2025. The annual average was only 5.5% in 2025 from 5.8% in 2024, 6.1% in 2023 and is substantially below the 14.1% ratio in 2008.
The expected price increases were evident in the purchasing price index. This rose to 85.6 in April after a record monthly jump to 75.8 in March from 55.1 in February.
The BER noted that the higher input costs could squeeze profit margins. This in turn could limit the sustainability of the recent improvement in activity. In addition, continued cost pressures at the factory level may contribute to broader inflationary pressures in the economy. This may result in higher interest rates. Already Botswana has increased its policy rate by 200 basis points.
Prospects
The index tracking expected business conditions improved slightly in April, although it remains below the neutral 50-point mark. This suggests that while purchasing managers are somewhat less pessimistic than in March, confidence in the outlook remains subdued.
The expectations index rose to 47.4 in April from 46.0 in March.
This is marked contrast to the optimism that was in the business community in February after a benign February Budget. Then the expectations index was at an optimistic 68.8.
Hopefully the South African manufacturing PMI will continue increasing in the months ahead.
What do you think?
