The seasonally adjusted Absa Purchasing Managers’ Index (PMI) remained just below the neutral 50-point mark, following January’s strong rebound.
While the index can be volatile month to month, recent readings indicate that the sharp contraction at the end of 2025 has likely bottomed out, with activity stabilising as we move further into the first quarter.
Key highlights from the February 2026 PMI include:
- Business activity holds in expansionary territory: The business activity index managed to remain above the 50-point mark, suggesting that production growth continued into February after reaccelerating in January. This points to a more constructive start to Q1 compared to the subdued performance seen in Q4 2025.
- Domestic demand remains the key driver: New sales orders continued to show improvement relative to the lows recorded at the end of 2025. As in January, the recovery appears to be driven primarily by domestic demand, while export sales remain under pressure. The stronger rand continues to weigh on export competitiveness, even as it supports lower input costs.
- Supplier deliveries and inventories support activity: The supplier deliveries index remained elevated, signalling slower delivery times typically associated with firmer demand. Inventories also stabilised after December’s sharp drawdown, suggesting that manufacturers are cautiously rebuilding stock levels to meet improving order flows.
- Employment still lags activity: The employment index improved modestly but remains below the neutral mark. As is often the case, hiring tends to lag sustained improvements in production and demand. Manufacturers appear cautious, preferring to see confirmation of stronger order books before expanding headcount.
- Cost pressures remain contained: The purchasing price index edged slightly higher but remains near multi-year lows. The stronger rand and softer fuel prices continue to provide relief on the import-cost front. This supportive cost environment may help stabilise margins should demand continue to firm.
- Business confidence remains elevated: The index tracking expected business conditions in six months’ time remains comfortably above the 50-point mark. Although it eased slightly from recent highs, it remains well above the 2025 average, indicating that respondents expect conditions to improve meaningfully later in the year.
The February PMI results suggest that the manufacturing sector is gradually regaining its footing following a very weak end to 2025. While the headline index remains marginally below 50, stabilising activity, easing cost pressures and firmer domestic demand provide a more constructive backdrop for Q1.
A sustained recovery in new orders, particularly from export markets, will be crucial to lifting the PMI decisively back into expansionary territory.