South African Manufacturer Sentiment Hits Seven-Month Low

South African manufacturer sentiment fell to a seven-month low in July, according to the latest Purchasing Managers’ Index released by Absa Group Ltd. The index dropped to 46.8 from a previous reading of 47.3, signaling a contraction in industrial confidence.

The decline is primarily attributed to concerns over escalating hostilities between the United States and Iran. These tensions have disrupted maritime trade in the Red Sea and the Strait of Hormuz, contributing to oil price volatility. Prices rose from approximately $72 a barrel last month to over $84 a barrel, fueling fears of increased diesel costs and further rand weakness.

Despite these global pressures, some domestic indicators showed improvement. Absa Group noted that domestic demand and production continued to recover while cost pressures eased slightly. However, manufacturers remain cautious due to weak export demand and the potential for future cost spikes linked to the geopolitical climate in the Middle East.