The seasonally adjusted Absa Purchasing Managers’ Index (PMI) increased by four points to 48.7 in March.

While the headline PMI remained in contractionary territory for a fifth consecutive month, this is the highest reading since the 52.6 points recorded in October last year.

Despite some recovery in March, a weak January and February mean that the average for the first quarter is 46.2 points, below the previous quarter’s 49 points.

The business activity index increased by 7.7 points to 48.3 in March in response to improved demand, Absa points out.

New sales orders increased by 10.2 points to 48.7 points in March, as a turnaround in export sales boosted demand recovery, it highlights.

The index tracking export sales showed significant gains in the export markets, with sales returning to expansionary territory for the first time in four months.

Absa highlights that this is despite the current global trade disagreements and logistical issues.

It points out that comments from respondents indicate that logistical issues at the ports remain, while tenuous relations with the US is bringing about uncertainty – although it may not be affecting trade at the moment.

The supplier deliveries index decreased slightly by 0.8 points to 54.1 points, indicating some improvement in delivery times (as the index is inversed, with an increase in delivery times resulting in a decline in the index).

Absa explains that while the slight improvement could be welcome if driven by better-working supply chains, it could also reflect sustained weaker demand.

The employment index increased by 3.9 points to 46.1 but remained in contractionary territory for an entire year (12 months since April 2024).

The inventories index ticked down to 45.9 in March as manufacturers reduced the stock of finished goods and raw materials, possibly with activity still slow to recover, Absa posits.

The purchasing price index decreased by 5.9 points to 64.5 in March.

“The rand exchange rate, in line with other emerging market currencies, has been relatively stronger against a weaker dollar, and this has served manufacturers well in terms of imported materials and fuel prices; hence, cost pressure is easing following two months of cost increases,” Absa highlights.

The index tracking expected business conditions in six months’ time decreased further by 2.5 points to 58 in March, edging below 60 points for the first time since 57.6 points in May 2024.

The return of loadshedding and deteriorating relations between the US and South Africa are expected to continue to weigh on sentiment.