South Africa factory sentiment softens as May manufacturing growth slows

South Africa’s factory recovery lost some heat in May, but it did not break. The seasonally adjusted Absa Purchasing Managers’ Index slipped to 50.8 from 52.6 in April, leaving manufacturing in expansion for a second straight month even as the pace of growth slowed sharply.

The details point to a fragile rebound rather than a firm turnaround. The business activity index fell to 43.5 from 52.8, and new sales orders dropped to 44.6 from 52.9, both readings indicating contraction. That matters in a sector closely tied to domestic demand, export competitiveness and the knock-on effect of policy shocks on business confidence.

The May reading was still above the first-quarter average of 48.3, showing some improvement from a weak start to the year. But the April pickup had been helped by demand being pulled forward as buyers rushed to beat expected cost increases, and that effect faded in May. In practical terms, manufacturers were still producing, but with less conviction and more caution.

Absa’s survey also showed the strain from costs remained intense. Respondents cited a weaker rand, higher international oil prices, more expensive courier services and surcharges on other goods and services. The purchasing price index eased by 0.8 points, but it still pointed to significant pressure on margins, even with an expected decline in diesel prices later in the week offering some near-term relief.

One of the clearest signs of caution was the inventories index, which rose to 55.8, its highest level since early 2023. That suggests many firms were buying ahead rather than responding to a durable upswing in demand. The survey also showed production itself slipping back into contraction, underscoring how quickly South Africa’s manufacturers can be hit by electricity instability, transport bottlenecks and softer external demand.

The survey’s brighter signal came from expectations. The index for expected business conditions six months ahead rose to 52.9 from 47.4, moving back above the neutral mark. Even so, that was far below February’s 68.8, before tensions in the Middle East escalated. The gap captures how quickly sentiment has swung across 2026, from optimism to caution and back again.

April had been the first month the PMI moved above 50 since September 2025, rising to 52.6 from 49 in March. That rebound was driven mainly by stronger domestic demand, while export sales declined. May’s softer reading suggests the recovery is still alive, but it remains vulnerable to cost shocks, weak demand and South Africa’s persistent infrastructure and logistics constraints.