PMI Falls to 42, Signalling South Africa’s Weakest Factory Conditions Since Covid
South Africa’s manufacturing sector has suffered a major setback, with the latest Purchasing Managers’ Index falling to 42. The number reflects the health of factory activity, and anything below 50 signals contraction. A reading of 42 indicates that the sector is weakening sharply, and Francis mentioned that an analyst had earlier described it as an “ugly number” because it contradicts signs that the economy was improving.
The PMI provides insight into future economic conditions because it measures new sales orders, production and purchasing activity. A higher figure suggests factories are optimistic and are preparing for higher demand. A lower figure suggests the opposite. The decline to 42 shows that factories are struggling, demand is weak and production is losing momentum.
This reading matters for several reasons. The anchors stress that factory activity is directly linked to job creation. Without strong manufacturing, South Africa cannot generate the jobs needed to reduce unemployment or inequality. Unemployment remains above 30 percent, and inequality remains one of the central issues in the economy. When factories do not expand, they do not hire, and the economy stays stuck in low growth.
This PMI decline also marks the worst reading since April 2020, when Covid lockdowns halted production. More than five years later, the sector is again under pressure. The anchors explain that this is disappointing because a stream of positive indicators suggested that the economy might be turning a corner. Improvements related to greylisting, financial market confidence and earlier growth projections all created expectations of a better end to the year. The PMI undermines that optimism.
From an economic perspective, the PMI drop aligns with broader concerns about demand. A Bloomberg report notes weak export sales and a steep decline in new sales orders, which fell from 48.9 to 35.6. Business activity also weakened significantly. While external demand has struggled, domestic conditions also appear soft, suggesting that the slump is not limited to global constraints. Weak demand reduces production, and weaker production reduces hiring, reinforcing economic stagnation.
Despite the negative short-term picture, there is a slight positive. Factory managers expect conditions six months ahead to improve, with forward-looking indicators sitting above 50. The anchors note that six months is a long time, and conditions may change. But it at least shows that businesses believe recovery is possible.
The PMI also sets the tone for the week, because South Africa is releasing its third-quarter GDP numbers next. Here’s a quick recap of the last two quarters: 0.1 percent growth in the first quarter and 0.8 percent in the second. Some banks expect around 0.4 percent for the third quarter. Growth at these levels cannot meaningfully reduce unemployment or inequality. With manufacturing now weakening, the outlook for growth remains fragile.
The fall to 42 is a reminder of how sensitive the manufacturing sector is to demand, confidence and structural constraints. It highlights how difficult it is for South Africa to build steady momentum when parts of the economy remain under strain. It also reinforces the urgency of improving production capacity, encouraging investment and supporting industries that can drive job creation. For now, the number reflects a sector still struggling to find its footing and an economy facing another difficult test.