Absa Purchasing Managers’ Index (PMI) for February released in partnership with the Bureau for Economic Research (BER) on Monday indicated the PMI lost ground in February, with the headline index declining from 48.7 to 47.4.
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Absa Purchasing Managers’ Index (PMI) for February released in partnership with the Bureau for Economic Research (BER) on Monday indicated the PMI lost ground in February, with the headline index declining from 48.7 to 47.4. The news follows an 8.2 point increase in the PMI in January. Economists have said that news was expected.
Absa said that most of the PMI subcomponents remained broadly unchanged from January, but weaker business activity and a further decline in employment weighed on the headline index. “Following an encouraging improvement at the start of the year, the business activity index has more than reversed January’s gains and fell back below the neutral 50-point mark.”
Absa added that this suggests that a possible rebound in production at the beginning of the year was not sustained. “The stop-start nature of manufacturing output, also evident in official data, is not conducive to longer-term capacity expansion, investment growth or employment gains.”
Absa said that new sales orders were largely unchanged in February after January’s solid rebound.
“While export sales improved somewhat relative to January, they remain firmly in contractionary territory. Although the stronger rand is beneficial from a cost perspective, it continues to weigh on international competitiveness,” it said.
Absa added that the positive highlight of the February PMI results was the renewed uptick in the expected business conditions index.
“The index rose back to December’s 68.8 points (from 66.4 in January). The commentary from respondents about conditions in February remained on balance negative; however, some expressly anticipate that the outlook will improve. Prevailing issues plaguing the sector include delays of shipments at South African ports, localised electricity disruptions and weak demand,” it said.
Lara Hodes, Investec economist, said that the seasonally adjusted headline Purchasing Managers’ Index (PMI) slid moderately in February to 47.4 from 48.7 logged in January, underpinned largely by a decrease in business activity and the employment index.
“The business activity index moved back into contractionary territory with a reading of 45.7, after climbing to 51.6 at the beginning of the year, indicating that a possible rebound in production at the beginning of the year was not sustained,” according to the BER.
Hodes added that new sales orders remained in line with January’s reading, still in contractionary terrain at 45.2, although export sales did improve somewhat during the month. “The recently released Eurozone Manufacturing PMI survey results indicate that manufacturing conditions improved notably in February, with the sector logging “its strongest month in almost four years.”
Hodes said that the supplier deliveries index also remained largely unchanged from January at an elevated 55.3 (a reading of 45.1 was recorded in December), which signifies slower deliveries (as the index is inverted), likely as a result of logistical impediments rather than robust demand, the BER noted, with new sales orders lacklustre over the period surveyed. “The employment index lost 1.4 points, sliding to 42.5. The largely subdued performance of the domestic manufacturing sector continues to deter the hiring of new employees. The Q4.25 quarterly labour force published by Stats SA revealed that the sector shed 61,000 positions over the quarter.”
Hodes added that although not considered during the survey period, the recent escalation in geopolitical tensions has increased uncertainty globally, which could weigh on supply chains in the near term.
North West University Business School economist Prof Raymond Parsons said that the weaker PMI for February confirms the continued vulnerable outlook for the manufacturing sector as 2026 unfolds.
“SA’s economic recovery so far remains modest, uneven, and with weak demand still affecting the manufacturing sector. It therefore emphasises why helpful measures - such as an easier interest rate policy and the recent consumer-friendly Budget to support economic activity - are needed,” he said.
Parsons added that GDP growth in 2026 is now expected to be about 1.6%. “The fact that the PMI survey expects business conditions to slightly improve later is a positive factor. However, while it is still early days, SA businesses must now also begin to assess the market impact on SA’s economic outlook of the elevated uncertainty now generated by the latest geopolitical developments in the Middle East.”
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