South Africa's factory pulse weakened further as production lost steam and homegrown demand cooled. Absa Group Ltd., the Johannesburg-based lender, said its Purchasing Managers' Index remained under the 50 mark for a third month, coming in at 45.8 in August, down from 46.8 the month before. The heaviest drag came from business activity, where the sub-index fell to 40.2 from 48.8, pointing to a clear hit to output. "For manufacturers, this points to a sector that entered the latter part of the third quarter with considerably less production momentum than it had just a month earlier," Absa said.
New sales orders slipped to 40.3 from 44.1, reflecting pressure from both exports and the home market. Absa noted that "Export sales appeared somewhat less weak during the month, suggesting that the renewed deterioration in demand was largely domestically driven." It added that "Respondents pointed to subdued consumer demand, weak confidence and particularly soft spending on non-essential goods - highlighting the pressure manufacturers continue to face from cautious household and business spending."
The survey was conducted in August, just as US-Iran tensions flared again after a lull in fighting. As a result, consumers have been pinched, with gasoline and fertilizer becoming pricier, inflation rising and less cash left over for non-essentials.
When economic headlines feel uncertain, staying consistent pays off, download our free Always Be Buying E-Book to learn how
Price pressure showed no relief. The purchasing price sub-index held at 67.2 in August. "Higher diesel and international oil prices added to costs during the month, while a stronger rand provided some relief on imported inputs," Absa said. "With the diesel price set to increase again in September, input-cost pressures are likely to remain elevated."
Supply chains looked more stretched too. The supplier deliveries sub-index increased to 58.6, up from 55.5, with some firms citing container shortages, limited shipping space and fresh holdups at Durban harbor. Still, sentiment six months out improved: expected business conditions rebounded to 54.7 from 49.3. Even so, Absa cautioned that "the combination of subdued orders and sharply weaker production suggests that near-term conditions remain challenging."
This is a classic squeeze: thinner order books at home, only modest help from exports, and costs that are stubbornly high. If you watch South Africa's real economy through retailers, energy-sensitive sectors or transport-heavy manufacturers, the message is simple enough to act on mentally: growth looks soft right now and pricing power is patchy, which can make earnings choppier until demand steadies or fuel costs cool.
