The seasonally adjusted Absa Purchasing Managers’ Index (PMI) lost ground in February, with the headline index having declined from 48.7 to 47.4.

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, the index reveals. 

Following a positive improvement at the start of the year, the business activity index more than reversed January’s gains and fell back below the neutral 50-point mark.

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

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, it adds.

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, the index reads.

A positive from 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 affecting the sector include delays of shipments at South African ports, localised electricity disruptions and weak demand.

On the downside, the business activity index more than reversed all of January’s gains and slipped back below the neutral 50-point mark.

The stop-start nature of production is also reflected in official data and is not conducive to long-term capacity-building investment growth or employment expansion, the index shows.

New sales orders moved sideways in February following a solid increase in January.

Export sales appeared better relative to January, but remain deep into negative territory.

While a boon from a cost perspective, the stronger rand exchange rate does impede competitiveness in international markets, Absa avers.

The employment index ticked down once more in February.

The latest Quarterly Labour Force Survey results for the fourth quarter of 2025 showed that the factory sector lost jobs on a quarterly basis.

The PMI results do not point to a meaningful recovery in the first quarter.

The inventories index ticked up slightly in February.

While below the neutral 50-point mark, the current level is largely in line with the series' average over the last two years.

The supplier deliveries index remained virtually unchanged after a surge in January.

Some respondents made specific remarks about shipment delays at South African ports, which could explain slower deliveries, Absa says.

This index is inverted, with slower deliveries leading to an increase in the index, as it is usually a sign of stronger demand for supplies, but the signal can be distorted owing to dysfunctional supply chains.

Given the subdued level of new orders, the elevated supplier deliveries index is unlikely to reflect strong demand and may instead point to ongoing logistical constraints.

The purchasing price index increased for a second consecutive month after reaching the lowest level since 2009 in December 2025.

Even after the increases, the index remains low by historical standards.

The apparent disconnect between the official intermediate goods producer price index (PPI) and the PMI’s equivalent measure stems from a surge in basic and fabricated metal prices, the index posits.

This accounts for the full PPI increase, as these metals constitute half of the PPI basket but are not as pronounced in the PMI sample.