South Africa's Absa Purchasing Managers’ Index declined by 8.8 points to 43.6 in August 2024, Compared to 52.4 in July. It's the fifth month out of the eight months of 2024 that activity contracted.
Index Decline Details
The Absa PMI declined significantly in August, falling by 8.8 points to 43.6 from 52.4 in July. This represents the fifth month of contraction in 2024, which signals a downturn in economic activity.
Business Activity Index Impact
The business activity index experienced a steep decline of 11.9 points to 38.9 in August, primarily due to a high base set in July and ongoing political uncertainty impacting overall economic confidence.
Market Sentiment and Economic Forecast
Despite the current contraction, optimism remains for future improvements as the expected rebound in demand and recovery in electricity supply could positively affect the manufacturing sector. Furthermore, Absa’s economic growth forecast for 2025 has been adjusted to 2.2%.
Volatility and Future Outlook
The PMI data shows volatility, making it challenging to predict future trends based solely on recent results. Nonetheless, manufacturers are becoming cautious about future business conditions as global demand remains sluggish.
Purchasing Price Index Stability
The purchasing price index showed stability, with minimal increases, indicating that inflation pressures may lessen with the anticipated interest rate cuts by the South African Reserve Bank, which could facilitate better business conditions.
