Business
South Africa’s Manufacturing Struggles: Job Losses Loom as PMI Hits New Low

South Africa’s manufacturing sector is under pressure, with employment expected to take a significant hit in 2025. The Absa Purchasing Managers’ Index (PMI) kicked off the year on a disappointing note, dropping by 0.9 points to 45.3 in January—the lowest level since August 2024.
This marks the third consecutive month of contraction, highlighting the sector’s struggle to regain momentum after the downturn in late 2024.
What’s Driving the Decline?
While there was a slight improvement in business activity, rising from 40.3 in December to 43.5 in January, it remains deep in contraction territory. New sales orders also showed a modest uptick, climbing from 37.4 to 42.0, suggesting some recovery in demand.
However, the broader picture remains bleak:
- Trade Disruptions: Ongoing political turmoil in Mozambique has disrupted trade routes, while fuel shortages are straining air freight operations.
- Major Plant Closure: The upcoming closure of ArcelorMittal’s Long business in South Africa is set to impact around 3,500 direct jobs, with ripple effects across the manufacturing sector.
- Supply Chain Challenges: The supplier deliveries index fell by 6.1 points to 49.9, reflecting faster delivery times likely linked to weaker demand rather than improved efficiency.
Also Read: Over 100,000 Jobs at Risk: ArcelorMittal South Africa’s Steel Business Closure Sparks Alarm
Employment Outlook: The Struggle Continues
The employment index dropped by 2 points to 44.4, marking the tenth consecutive month of contraction. Jobs in the manufacturing sector have been shrinking since early 2024, and the latest data suggests that recovery will be slow.
Cost Pressures Mount
Adding to the sector’s woes, the purchasing price index surged by 7.8 points to 68.2 in January. This spike is driven by:
- A weaker rand exchange rate
- Rising global oil prices
- A fuel price hike at the start of the year, with more increases expected in February
A Glimmer of Optimism?
Despite the current challenges, manufacturers remain cautiously optimistic about the future. The index tracking expected business conditions in the next six months dipped slightly to 64.9 but still reflects a hopeful outlook.
Global uncertainties, such as US trade tariffs under President Donald Trump, continue to pose risks, but local businesses are focusing on resilience and adaptation.
Key PMI Metrics (Oct 2024 – Jan 2025):
Index | Oct | Nov | Dec | Jan |
---|---|---|---|---|
Business Activity | 55.6 | 49.0 | 40.3 | 43.5 |
New Sales Orders | 54.8 | 45.9 | 37.4 | 42.0 |
Employment | 49.4 | 46.9 | 46.5 | 44.4 |
Inventories | 54.6 | 50.6 | 50.7 | 46.5 |
Supplier Deliveries | 48.7 | 48.3 | 56.0 | 49.9 |
Purchasing Prices | 60.0 | 61.7 | 60.4 | 68.2 |
South Africa’s manufacturing sector faces a tough road ahead, with job losses looming and economic pressures mounting. While slight improvements in demand offer a silver lining, it’s clear that recovery will require sustained efforts to address supply chain issues, cost pressures, and global uncertainties.
Rand Weakens Ahead of Manufacturing PMI Data as Investors Await Key Indicators
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