South Africa Factory Outlook Dims as Business Activity Drops

Workers sew garments on machines at the Prestige Clothing (Pty) Ltd. textile factory, operated by The Foschini Group Ltd., in the Maitland district of Cape Town, South Africa, on Thursday, Dec. 10, 2020. South African retailers including The Foschini Group and Woolworths Holdings Ltd. are increasing investment in local clothing manufacturers -- both to reduce a dependency on Chinese imports and secure a supply chain thrown into disarray by Covid-19 restrictions. Photo by Dwayne Senior /Photographer: Dwayne Senior/Bloo

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(Bloomberg) — South African manufacturing sentiment soured slightly in February as business activity weakened and employment declined.

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Absa Group Ltd.’s Purchasing Managers’ Index, compiled by the Bureau for Economic Research, slipped to 47.4 from 48.7 in January, the Johannesburg-based lender said in an emailed statement on Monday. 

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The decline reversed part of the prior month’s sharp gain and edged further below the neutral 50-point mark.

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“This suggests that a possible rebound in production at the beginning of the year was not sustained,” Absa said. “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.”

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The business-activity sub-index fell to 45.7 from 51.4 while the gauge of employment slipped to 42.5 from 43.9.

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The stronger rand, which has risen around 4% against the dollar since the end of last year, was positive to the extent that it helped hold down import costs but “continues to weigh on international competitiveness,” Absa said.

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One bright spot was a renewed up-tick in the expected business conditions sub-index, which advanced to 68.8 from 66.4. Still, the commentary from survey respondents remained negative, with manufacturing continuing to face shipment delays at South African ports, local disruptions to energy supplies and weak demand.

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South Africa’s unemployment rate dropped to the lowest level in more than five years in the fourth quarter of 2025, but the results showed the factory sector lost jobs on a quarterly basis. The PMI results don’t point to a meaningful recovery in the first quarter, Absa said. 

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—With assistance from Mpho Hlakudi.

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(Updates with detail on business activity in fifth paragraph, comment on rand in sixth.)

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