The seasonally adjusted Absa Purchasing Managers’ Index (PMI) rose by 1.6 points to 49 in March, from 47.4 in February.

Absa says the increase in the PMI was primarily supported by a marginal rise in the business activity index and a sharp increase in the supplier deliveries index, noting, however, that the spike in supplier deliveries should be interpreted with caution.

The PMI indicates that the business activity index rose by 0.4 points to 46.1 in March.

While still below the neutral 50-point mark and not enough to recover February’s steep losses, Absa says the first-quarter average was notably better than the average for the fourth quarter of 2025, suggesting that the manufacturing sector had a better start to the year after contracting in the final quarter of 2025.

New sales orders edged down by 0.7 points to 44.5 in March.

Absa explains that export sales deteriorated notably after an encouraging uptick in February, while several respondents pointed to front-loaded orders in March and warned of a potential pullback in April.

This suggests that demand remains fragile and is likely to come under further pressure in the coming month.

Additionally, the supplier deliveries index rose sharply by 6.8 points to 62.1.

As this index is inverted, Absa says the increase signals slower delivery times.

While this is often associated with stronger demand for supplies, in the current environment, the company says it is more likely to reflect ongoing logistical constraints and supply chain disruption.

Absa adds that concerns have also been raised that these challenges may intensify further if global shipping routes are affected by geopolitical tensions, particularly a sustained closure of the Strait of Hormuz.

Moreover, the employment index was little changed in March, rising by 0.8 points to 43.3.

Although it regained some of February’s losses, Absa says it remains well below the neutral 50-point mark, underscoring the continued weakness in hiring conditions across the sector.

The purchasing price index jumped by 20.7 points to 75.8 in March, the highest level since early 2023 and the largest monthly increase on record since September 1999.

The surge was driven by a weaker rand and higher prices for oil-derived inputs such as polymers.

With fuel price increases coming into effect, cost pressures are expected to remain elevated in the months ahead, adding strain to manufacturers’ margins and raising the risk of broader inflationary pressures in the economy, Absa says.

Further, the index tracking expected business conditions in six months’ time fell by 22.9 points, marking the largest drop on record.

Absa explains that this suggests a sharp deterioration in sentiment among purchasing managers, many of whom expressed concern about the effect of the ongoing Middle East conflict on both demand and input costs.

The company notes that the March PMI results suggest that the manufacturing sector has yet to experience a significant deterioration in activity as a result of geopolitical tensions, but the sharp rise in input costs and the collapse in business confidence point to mounting downside risks.

While activity improved marginally, persistent weakness in new orders and intensifying cost pressures are likely to weigh on the sector in the near term.