At 53.0, the PMI slipped just 0.1 index point from 53.1 in December. Since the index – based on monthly surveys of purchasing managers in the manufacturing sector – has a zero to 100 range, this is barely a passing grade. 

Confidence levels remain low against the backdrop of numerous challenges, notably load shedding.

Overall, the January read was a mixed bag, with the business activity subindex putting in a surprise surge that could point to production growth. 

But the employment index fell back into negative territory below 50, suggesting that the sector is still not creating jobs in a meaningful way at a time when the unemployment rate is more than 43%, based on its widest measure. 

“Most encouraging was the significant, and surprising, improvement in the business activity index relative to the previous month … Should this translate into actual production growth, it would be a promising start to the year for the struggling sector,” Absa said. 

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The business activity subindex leapt to 56.0 in January from 45.2 in December, despite concerns raised by respondents about rolling blackouts. 

Among other things, this may suggest that manufacturers are finding ways to address the “new normal” of almost perpetual rolling blackouts, including reducing their reliance on unreliable Eskom by installing solar panels.

They are, as the saying goes, making a plan. But rolling blackouts remain a massive constraint on the sector’s potential. 

“Continued activity growth would require a sustained improvement in demand and most likely a move to less intense stages of load shedding,” Absa said. 

“In this regard, the increase in the expected business conditions index was encouraging. The index tracking expected business conditions in six months’ time rose by 8.9 points to 63.8 – the best level since early 2022.”

Still, there are weeds galore among the green shoots. 

The employment index, which rose unexpectedly to 54.3 in December from 45.7 in November, fell to 48.4 in November. This places it back below the neutral 50 mark and Absa said it signalled that “any improvement in staffing levels at the end of the year was temporary”.

The manufacturing sector is a key component of the wider economy – it’s pretty hard to industrialise or “re-industrialise” without it. Come to think of it, it’s also hard to do so without adequate supplies of power. 

Virtually every economic indicator in South Africa currently highlights the mounting toll of Eskom’s breakdown. But some factories at least seem to be finding alternative power sources. 

And that shines a light on where the future lies. DM/BM