Manufacturing activity dropped further in December, but sector optimistic about 2026

The Absa Purchasing Managers’ Index (PMI) dropped further in December 2025, after plunging in November to its lowest level since April 2020.

RELATED: Why we should be concerned that SA's PMI hit its lowest level since 2020

PMI decreased by 1.5 points to 40.5 points in December.

The Index is an indication of manufacturer sentiment in the country and is seen as a measure of confidence in terms of investing into the future.

While it remained firmly in contractionary territory, the data also reflects an increase in optimism from manufacturers.

This is not really a contradiction, says Absa economist Sello Sekele, as they've seen that at the end of a year or start of a new year, people are quite optimistic about activity in six months' time.

"People tend to be quite hopeful at these times, so it's not something new."

What is particularly worrying about the level of the fall in the PMI is that it was quite broad-based, although led mainly led by inventory and employment: "Demand remained subdued, and mainly due to domestic factors. So, it's not a good print to end the year."

It will be tough for the sector to add jobs when business conditions in the country have been difficult for some time, Sekele says.

Relative to November though, the new sales orders index dipped only marginally to 35.4 in December while the business activity index increased by 9.4 points to 46.1.

For more detail, listen to the interview audio at the top of the article