South Africa’s seasonally adjusted Absa Purchasing Managers’ Index (PMI) declined to 46.8 in July 2026 from 47.3 in June, signalling a second consecutive month of contraction in manufacturing activity. Domestic demand and production continued to recover, supported by shorter supplier delivery times. However, inventories fell further as firms remained uncertain about the sustainability of stronger demand. Some businesses may also be postponing orders in anticipation of lower input costs ahead.
Input cost pressures remain elevated compared with the pre-war period, and rising diesel prices are expected to add renewed strain on operating costs. Even so, overall inflationary pressures appear to have peaked, provided there is no further significant increase in global energy prices.
Looking ahead, firms expect business conditions to weaken. Renewed tensions in the Middle East are pushing up oil prices, leading businesses to question the durability of the recent improvement in activity.
