South Africa faces a quiet week ahead on the data front as the first domestic releases for 2026 begin to trickle out. Analysts will first be eyeing Absa’s purchasing managers index (PMI) for January, scheduled for release on Monday, for green shoots in the local manufacturing sector. South African factories ended 2025 on the backfoot as weak domestic and export demand dragged down inventories and employment.
In December, Absa’s PMI declined by 1.5 points to 40.5, its lowest level in six years. A PMI reading below 50 indicates that manufacturing activity is contracting, meaning overall business conditions in the sector are deteriorating. While the metric is likely to remain in contractionary territory, a modest recovery is on the cards, said Investec economist Lara Hodes.
“We could see activity pick up as 2026 progresses, with the index measuring expected business conditions in six months’ time lifting by a marked 18.1 points at the end of 2025, the highest level logged since September 2024, according to the BER,” she said. Another industry health check will come later in the week, when S&P Global South Africa releases its own PMI. The ratings agency’s index fell from 49 in November to 47.7 in December — the fastest contraction since January last year.
Read Full Article on Business Day
[paywall]
The sharp drop in business activity was broadly attributed to weaker client demand and challenging economic conditions. However, S&P agreed that the sector’s woes should be short-lived. Forward looking business confidence remained elevated in December, with firms banking on a recovery in activity over the coming year.
“PMIs were soft at the end of 2025, though forward-looking indicators were more positive,” said Lisette IJssel de Schepper, chief economist at the Bureau of Economic Research. “It will therefore be interesting to see whether the economy picked up renewed momentum at the start of the year.” Monday also brings the release of Naamsa’s new vehicle sales for January. These could offer further support to sentiment, with car makers riding a high of interest rate cuts, low vehicle inflation and consumers’ cash injection from the introduction of the two-pot retirement system.
[/paywall]
