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Absa says the manufacturing sector got off to a better start in January, with the PMI showing signs of recovery driven by stronger local demand.
The manufacturing sector showed signs of recovery in January following a very bleak year-end. The Absa Purchasing Managers’ Index (PMI) for January 2026 rose 8.2 notches to 48.7 index points, with most of its sub-divisions showing an improvement.
Absa Corporate and Investment Banking Economist, Andiswa Nondudle, says the significant improvement in the PMI print is encouraging and a great start to the year ahead.
The manufacturing sector started the year on a positive note, this as the Absa PMI for January 2026 rose 8.2 notches to 48.7 index points.
Absa says while the headline number remains below 50 index points, which is still in contraction territory, the latest uplift in the number is indicative of stronger domestic demand which could spur continued upward production momentum going forward.
“I think the January print is quite an encouraging one. It’s a great start to the year. The PMI edged up by about 8.2 points to 47.8. If you look at the underlying indices supporting the headline index, demand picked up by quite a bit. The new sales orders sub-index recorded a significant jump in January. Even though it remained below the mark that separates expansion from contraction, it is still significant enough to lift the PMI,” says Nondudule.
Absa says unlike in December, all subcomponents of the headline index looked better in January.
Nondudule says, “So much of the recovery in demand was driven by local demand, as the BR noted that external sales declined during January. This is mostly attributed to the very strong rand during the month, which made South African exports more expensive for the rest of the world. That is one of the reasons we saw a decline in exports. As you pointed out, the external environment remains quite uncertain, and that also plays a role,” says Nondudule.
Looking ahead, Absa says firms remain optimistic about the outlook for the sector in six months’ time. It says this is due to the lower inflation rate and stronger Rand.
Absa says while the strong rand exchange rate is a potential headwind for exporters, it is positive from a cost perspective as it lowers import costs and contributes to lower fuel prices.
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