South Africa’s Manufacturing Sentiment Declines in February

South Africa’s manufacturing sector experienced a decline in sentiment during February 2024, as business activity and employment levels dropped. The Purchasing Managers’ Index (PMI), compiled by Absa Group Ltd. and the Bureau for Economic Research, fell to 47.4 from 48.7 in January. This shift indicates a reversal of the previous month’s gains and positions the index further below the neutral 50-point mark.

According to Absa, the decrease suggests that the anticipated rebound in production at the start of the year was not sustained. The report highlights a “stop-start” nature of manufacturing output, which is evident in official data and hampers long-term growth in capacity, investment, and employment.

Declining Business Activity and Employment

The business activity sub-index saw a significant drop to 45.7 from 51.4, while the employment gauge fell to 42.5 from 43.9. These figures indicate that the manufacturing sector is struggling to maintain momentum, further complicating the already challenging economic landscape.

Despite the challenges, the South African rand has strengthened, rising approximately 4% against the US dollar since the end of last year. While this development has helped reduce import costs, Absa cautioned that the rand’s strength continues to diminish international competitiveness.

A positive note emerged with the expected business conditions sub-index, which increased to 68.8 from 66.4. Nonetheless, feedback from survey respondents remained largely negative, citing ongoing issues such as shipment delays at South African ports, disruptions in energy supply, and weak demand.

Unemployment and Future Outlook

South Africa’s unemployment rate reached its lowest level in over five years during the fourth quarter of 2025, yet the factory sector reported job losses on a quarterly basis. The PMI results do not indicate any meaningful recovery for the first quarter of 2024, according to Absa.

The ongoing challenges in the manufacturing sector reflect broader economic issues in South Africa, underscoring the need for strategic interventions to bolster growth and stability. As the landscape continues to evolve, stakeholders will be closely monitoring these trends for potential implications on the economy.