South Africa’s manufacturing sector finally emerged from the darkness in December, ending eight months of contraction with a surge in activity thanks to a holiday season respite from Eskom’s dreaded load shedding.
The Absa Purchasing Managers’ Index (PMI) jumped 2.7 points to 50.9, crossing the expansion threshold for the first time since April. Factories hummed with increased business activity, fueled by a relative lack of power cuts over the festive period.
But the celebrations may be a touch premature. While optimism roared back, with expectations for the next six months hitting their highest point since January, new orders remained flat, hinting at continued tepid underlying demand. Moreover, worries about potential input shortages loom, with disruptions potentially stalling the nascent recovery.
Absa analysts cautioned that “the unavailability of inputs required could hurt production abilities and push up costs going forward.” This could dampen the newfound cheer and put a brake on the manufacturing sector’s long-term progress.
