South Africa’s Factory Output Slumps for Fifth Straight Month

AFRICAN BUSINESS AND ECONOMYMarch 3, 2025 at 12:18 PM UTC

TLDR

South Africa’s factory sentiment declined further in February, marking the fifth consecutive month of contraction
Absa Group’s Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research, fell to 44.7 from 45.3 in January
The PMI had peaked at 53.3 in September, driven by optimism over the post-election coalition government

South Africa’s factory sentiment declined further in February, marking the fifth consecutive month of contraction as concerns over global trade, strained U.S.-South Africa relations, and the return of power cuts weighed on confidence.

Absa Group’s Purchasing Managers’ Index (PMI), compiled by the Bureau for Economic Research, fell to 44.7 from 45.3 in January, below the Bloomberg survey median estimate of 45. A reading below 50 signals contraction in the manufacturing sector.

Key indicators declined, with business activity falling to 40.6 from 43.5, new sales orders dropping to 38.7 from 42, and the employment index slipping to 42.2 from 44.4. The six-month business outlook also weakened to 60.5 from 64.9. The PMI had peaked at 53.3 in September, driven by optimism over the post-election coalition government. However, sentiment has deteriorated each month since then.

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Key Takeaways

The manufacturing sector faces multiple pressures, including renewed power cuts, uncertainty over South Africa’s trade relations with the U.S., and global tariff threats. The U.S. recently froze assistance to South Africa over unfounded land confiscation claims, adding to diplomatic tensions. Power outages, absent for 10 months, returned in February, disrupting industrial activity. Meanwhile, declining new orders signal weaker demand, which could slow production and job creation. The continued decline in factory sentiment suggests South Africa’s economic recovery remains fragile, with policymakers needing to stabilize energy supply and trade conditions to restore business confidence.

South Africa

Absa Group

Economy

United States

Factory