South African Manufacturing Activity Grows for Second Month

JOHANNESBURG (Reuters) – South African manufacturing activity grew in October for the second month in a row, according to a local purchasing managers' index (PMI) survey. This marks the first time since early 2023 that this highly volatile sector has recorded two consecutive months of growth.

The seasonally adjusted PMI, sponsored by South African bank Absa, fell to 52.6 points in October from a revised 53.3 in September, remaining above the 50-point mark that separates expansion from contraction.

Both the business activity and new sales orders sub-indices showed strong performance, and Absa indicated that further positive signs are on the horizon.

"Local demand is expected to pick up pace as some benefits from the interest rate cut (by the central bank in September) come through with a lag," Absa stated.

Additionally, other windfalls such as lower inflation and an increase in consumer spending due to the new two-pot retirement system could help stimulate the economy further.

The "two-pot" pension reform, introduced on Sept. 1, allows individuals to make partial withdrawals from their pension funds before retirement and is anticipated to boost retail sales and economic growth in the final quarters of the year.