South Africa’s Factory Output Slides as PMI Hits Lowest Level Since April 2020

South Africa’s chief manufacturing index contracted sharply in November, with the Absa Purchasing Managers’ Index (PMI) falling to its weakest level since the hard Covid lockdown in April 2020. The index, compiled by the Stellenbosch-based Bureau for Economic Research, dropped to 42.0 points in November from 49.2 in October, a move that signals a clear deterioration in factory activity.

The PMI is a monthly survey of purchasing managers in manufacturing and combines their responses on orders, output, jobs, delivery times, and inventories into a single index. Readings above 50 indicate expanding factory activity, while those below 50 point to contraction. The index has only been above 50 once this year, in September, when it reached 50.8, which means manufacturing has effectively spent almost the entire year in decline.

The November reading is the worst since April 2020, when the PMI collapsed to 5.1 as strict lockdown rules halted most production. While current conditions are nowhere near that extreme, the comparison underlines how weak the sector has become under the strain of slow demand, high input costs, power problems, and policy uncertainty.

Most of the sub-indices weakened further in November, with new sales orders and business activity under pressure, pointing to falling demand in both the domestic economy and in export markets.

Supplier performance remains strained, suggesting that logistics and input supply issues continue to weigh on operations.

The only sub-index that showed an improvement was the employment component, which rose modestly to 46.2 from 45.1, but it remains below the 50-point level that would indicate net job creation.

The slump raises fresh concerns about the broader outlook, because manufacturing is often seen as a leading signal for short-term economic momentum. A PMI that spends month after month below 50 typically translates into weak industrial production numbers and softer GDP growth in subsequent quarters. With the index deep in negative territory again, the risk is that overall growth for 2026 could undershoot already modest expectations.

Sustained weakness in factories matters for several reasons. Manufacturing is a key source of relatively well-paid, semi-skilled jobs, and a prolonged contraction tends to limit hiring or trigger layoffs, at a time when South Africa already faces very high unemployment. Lower output also weighs on export earnings and tax revenues, eroding the state’s ability to stabilise its public finances.

A depressed PMI can also feed into business confidence, discouraging firms from committing to new investment in machinery, plants and technology. That is particularly serious given South Africa’s long-running problem of low fixed investment, which has held back productivity and long-term growth. If manufacturers cut back further on capital spending, the country’s growth ceiling could drop even lower over the medium term.

The latest reading will sharpen the focus on structural constraints that have been hurting industry for years. These include unreliable electricity supply, rising administered prices, congested ports and rail, empowerment policy provisions, threats to property rights, and a heavy regulatory and labour burden. Without progress on these fronts, economists warn that even a global upswing may not translate into a strong local industrial recovery.

Bheki Mahlobo told The Common Sense: “For now, the November PMI suggests that South Africa is heading into 2026 with a manufacturing sector under strain and a growth outlook that remains fragile. What you really see in the data is how urgent it is for the GNU to move on hard reforms that improve the competitiveness of South Africa’s business climate — the government has had a good run in shoring up sentiment and confidence but without hard reform that is not enough to lift growth.”