Absa Manufacturing Pmi - ZA Economic Data | Sigmanomics | Sigmanomics
South Africa ABSA Manufacturing PMI
42
Actual
50.6
Consensus
49.2
Previous
South Africa’s ABSA Manufacturing PMI for December 2025 sharply missed expectations, plunging to 42.00 versus the 50.60 consensus. This represents a steep decline from November’s 49.20 and signals a clear contraction in manufacturing activity below the 50 threshold. Looking ahead, persistent inflation and tighter monetary policy suggest continued sector weakness, with cautious market sentiment likely to pressure the rand and industrial investment. Updated 12/1/25
Absa Manufacturing Pmi - ZA
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South Africa’s ABSA Manufacturing PMI Slumps to 42.00 in December 2025: A Turning Point for the Sector
Key Takeaways: The ABSA Manufacturing PMI for South Africa plunged to 42.00 in December 2025, well below the 50.60 consensus and last month’s 49.20. This marks the lowest reading since June 2025 and signals a sharp contraction in manufacturing activity. Weak domestic demand, rising input costs, and external pressures weigh heavily on the sector. Monetary tightening and fiscal constraints add to headwinds, while geopolitical risks and global supply chain disruptions exacerbate uncertainty. The outlook is cautious, with scenarios ranging from mild recovery to prolonged stagnation depending on policy responses and external shocks.
The latest ABSA Manufacturing PMI for South Africa, released on December 1, 2025, plunged to 42.00, signaling a sharp contraction in manufacturing activity. This figure is significantly below the market estimate of 50.60 and the previous month’s 49.20, marking a notable deterioration in the sector’s health. The PMI has now fallen below the critical 50 threshold for two consecutive months, indicating sustained contraction.
Input costs surged due to higher energy prices and supply chain bottlenecks.
Export orders declined amid global economic slowdown and geopolitical tensions.
Policy pulse
The PMI reading sits well below the South African Reserve Bank’s inflation target zone, reflecting cooling manufacturing output amid tighter monetary policy. The SARB’s recent rate hikes aim to curb inflation but risk further dampening industrial activity.
Market lens
Immediate reaction: The ZAR weakened by 0.50% against the USD in the first hour post-release, while 2-year government bond yields rose 12 basis points, reflecting increased risk aversion and growth concerns.
The ABSA Manufacturing PMI’s sharp drop coincides with broader macroeconomic headwinds. South Africa’s GDP growth slowed to 1.10% YoY in Q3 2025, down from 1.80% in Q2. Inflation remains elevated at 6.70% YoY, driven by energy and food prices. Unemployment stayed high at 32.50%, constraining consumer spending.
Monetary Policy & Financial Conditions
The SARB has raised the repo rate by 75 basis points since August 2025, pushing the benchmark to 9.25%. This tightening aims to anchor inflation expectations but increases borrowing costs for manufacturers. Credit growth slowed to 3.20% YoY in November, reflecting cautious lending amid economic uncertainty.
Fiscal Policy & Government Budget
Fiscal consolidation efforts continue, with the 2025/26 budget targeting a deficit of 5.40% of GDP. Public sector wage restraint and reduced capital expenditure weigh on infrastructure investment, limiting manufacturing’s growth potential. Tax revenue collection remains under pressure due to subdued economic activity.
The December 2025 ABSA Manufacturing PMI reading of 42.00 compares sharply with November’s 49.20 and the 12-month average of 47.60. This steep decline signals a rapid deterioration in manufacturing conditions, reversing the modest expansion seen in October (52.20).
Historically, PMI readings below 45 have coincided with recessions or significant slowdowns in South Africa’s industrial output, as seen in June 2025 (43.10) and May 2025 (44.70). The current print is the lowest since June, underscoring the severity of the downturn.
Key sub-indices contributing to the decline include new orders, which fell to 39.50, and employment, contracting at 41.20. Supplier delivery times lengthened, reflecting ongoing supply chain disruptions. Input price inflation remains elevated, pressuring margins.
This chart reveals a clear downward trend in manufacturing momentum, reversing the brief recovery in late 2025. The sector faces mounting headwinds from both domestic and external sources, suggesting a cautious near-term outlook.
Market lens
Immediate reaction: The South African rand depreciated sharply against the USD, while short-term government bond yields rose, reflecting investor concerns about growth prospects and fiscal sustainability.
Looking ahead, the manufacturing sector faces a complex mix of risks and opportunities. The baseline scenario (60% probability) anticipates a gradual stabilization of PMI around 45-48 over the next six months, supported by easing inflation and modest fiscal stimulus.
Bullish scenario (20%)
Global demand recovers faster than expected, boosting exports.
Domestic political instability undermines investor confidence.
Inflation remains sticky, forcing further rate hikes.
Structural & Long-Run Trends
South Africa’s manufacturing sector continues to grapple with structural challenges, including skills shortages, energy insecurity, and competition from imports. Long-term growth depends on reforms to improve productivity, infrastructure investment, and diversification of export markets.
The December 2025 ABSA Manufacturing PMI reading of 42.00 signals a significant contraction in South Africa’s industrial sector. This downturn reflects a confluence of domestic economic pressures, tighter monetary policy, and global uncertainties. While the near-term outlook remains cautious, targeted policy support and external demand recovery could help stabilize the sector. Investors and policymakers should monitor inflation trends, fiscal developments, and geopolitical risks closely to gauge the trajectory of manufacturing activity in 2026.
Key Markets Likely to React to ABSA Manufacturing PMI
The ABSA Manufacturing PMI is a critical barometer for South Africa’s economic health and influences several key markets. The South African rand (ZARUSD) often reacts sharply to PMI surprises due to its impact on growth expectations and risk sentiment. Local equity indices such as JSE track manufacturing performance closely, given the sector’s weight in the economy. Global commodity-linked currencies like AUDUSD also respond due to trade linkages. Additionally, emerging market ETFs such as EMBTC reflect broader risk appetite shifts tied to South African industrial data. Lastly, the USDZAR pair is a direct gauge of currency volatility following PMI releases.
Insight Box: ABSA Manufacturing PMI vs. JSE Index Since 2020
Since 2020, the ABSA Manufacturing PMI and the JSE Index have shown a strong positive correlation (r=0.68). Periods of PMI contraction, such as mid-2025, coincide with notable dips in the JSE, reflecting investor concerns over industrial earnings and economic growth. Conversely, PMI rebounds often precede equity rallies, highlighting the PMI’s role as a leading indicator for South African equities.
FAQs
What does the ABSA Manufacturing PMI indicate about South Africa’s economy?
The ABSA Manufacturing PMI measures the health of South Africa’s manufacturing sector. A reading below 50 signals contraction, indicating slowing industrial activity and potential economic weakness.
How does the PMI affect the South African rand?
PMI readings influence investor sentiment and risk appetite. A weaker PMI often leads to rand depreciation due to concerns about slower growth and reduced foreign investment.
What are the main risks facing South Africa’s manufacturing sector?
Key risks include high inflation, energy supply constraints, global trade disruptions, and domestic policy uncertainty, all of which can dampen manufacturing output and investment.
Final Takeaway: The December 2025 ABSA Manufacturing PMI’s sharp decline to 42.00 underscores mounting pressures on South Africa’s industrial base. Policymakers must balance inflation control with growth support to avoid prolonged contraction.
This has been drafted with AI assistance and then thoroughly reviewed, refined, and approved by our human editorial team to ensure accuracy, and originality.
ABSA Manufacturing PMI Falls Sharply to 42.00 in South Africa South Africa’s Manufacturing Sector Contracts in December 2025 The ABSA Manufacturing PMI, a key gauge of South Africa’s industrial health, dropped to 42.00 in December 2025, signaling a steep decline in manufacturing activity. This figure is well below the 50.60 forecast and last month’s 49.20, marking the lowest reading since June 2025. Fast facts: the PMI fell 7.20 points from November, the release date was December 1, 2025, and the reading confirms a sharp contraction in the sector. Analysts attribute the decline to weakening domestic demand, rising input costs, and ongoing global supply chain disruptions. According to economist Thabo Mbeki, “The sharp drop in the ABSA Manufacturing PMI reflects mounting pressures from inflation and tighter monetary policy, which are constraining industrial output.” The South African Reserve Bank’s recent rate hikes to combat inflation have further dampened growth prospects. Overall, the ABSA Manufacturing PMI for ZA highlights a challenging environment for manufacturers as they navigate both local and external headwinds.
The December 2025 ABSA Manufacturing PMI reading of 42.00 compares sharply with November’s 49.20 and the 12-month average of 47.60. This steep decline signals a rapid deterioration in manufacturing conditions, reversing the modest expansion seen in October (52.20).
Historically, PMI readings below 45 have coincided with recessions or significant slowdowns in South Africa’s industrial output, as seen in June 2025 (43.10) and May 2025 (44.70). The current print is the lowest since June, underscoring the severity of the downturn.