SA’s factory sentiment eased in May as activity and demand slowed, though the manufacturing purchasing managers’ index (PMI) remained in expansionary territory for a second consecutive month.The seasonally adjusted Absa PMI, compiled by the Bureau for Economic Research (BER), declined by 1.8 points to 50.8 in May, having been 52.6 in April. A reading above 50 indicates an improvement in business conditions, while a reading below 50 signals deterioration.The BER said the headline index remained above the neutral 50-point mark, but the survey results pointed to weaker conditions from April to May.The PMI is based on monthly surveys of purchasing managers in the manufacturing sector. Respondents indicate whether indicators such as business activity, new sales orders, employment, supplier deliveries and inventories have increased, decreased or remained unchanged from the previous month.“In April, manufacturers benefited from demand being brought forward in anticipation of further cost increases, but this effect faded in May,” the BER said.The business activity index fell to 43.5 in May from 52.8 in April, slipping back into contraction after two months of improvement. The BER said the decline in production was likely to have been driven by weaker demand.New sales orders also fell sharply, declining to 44.6 from 52.9 in April. The BER said the May reading took the index back in line with its first-quarter average.“As some respondents had warned in April, last month’s demand increase did not carry over into May,” the BER said.The BER said export sales improved somewhat in May compared with the first quarter, but remained in negative territory.EmploymentEmployment was one of the stronger components of the survey. The employment index rose for a second consecutive month, increasing to 48.4 in May from 43.8 in April and 43.3 in March.The BER said the index remained below the neutral 50-point mark but was at its best level since mid-2025.Inventories increased further in May, with the inventories index rising to 55.8 from 52.3 in April. The BER said this was the highest level since early 2023.It said higher inventories contributed positively to the headline PMI, as they had in April, but this likely reflected pre-emptive buying rather than expectations of stronger future demand. Purchasing managers probably stocked up on raw materials and production goods in anticipation of price increases, the BER explained. The supplier deliveries index remained elevated, rising slightly to 61.6 in May from 61.4 in April. It stood at 62.1 in March.The BER said the supplier deliveries index is inverted, meaning higher readings actually indicate slower deliveries.DisruptionsThe sharp increase in March followed disruptions linked to the effective closure of the Strait of Hormuz, with respondents referring to transport delays and shortages of some raw materials.The BER said the May reading probably reflected supply-side constraints rather than stronger demand for inputs, given ongoing disruptions to global shipping routes and persistent logistical challenges at SA ports.The purchasing price index eased slightly to 84.8 in May from 85.6 in April, after rising from 75.8 in March.The BER said the purchasing price index had halted its recent steep ascent but still pointed to a significant increase in cost pressure compared with the start of the year.It said an expected decline in diesel prices would provide some relief, but many respondents reported higher costs beyond fuel, including more expensive courier services and surcharges on other goods and services.The index measuring expected business conditions in six months rose above the neutral 50-point mark, increasing to 52.9 in May from 47.4 in April.The BER said this suggested purchasing managers expected business conditions to be better by the end of the year than they were at the time of the survey.However, the index remained below the 68.8 recorded in February, before tensions in the Middle East escalated.