The Absa Purchasing Managers’ Index (PMI) rose to 53 index points in February from the 50.9 recorded in the previous month. Remaining at about the neutral 50 level is a positive sign in itself.

“The most encouraging outcome of the February survey was a continued improvement in new sales orders. Following a rise in January, the index rose further to 54.0 index points, which is the best level since October 2020. The improvement was supported by better export sales relative to the previous month, while the loosening of local lockdown restrictions likely also contributed to an uptick in domestic demand,” Absa said in a statement.

The business activity index, which had declined for four consecutive months, shot up 8.6 points to 52.1, while the inventories index climbed back above 50.

“After a slow and concerning start to the year, it would seem that the manufacturing sector has turned a corner if the latest PMI figures are anything to go by,” NKC African Economics said in a commentary on the data.

One point of concern is the employment index.

“Following a somewhat surprising uptick in the previous month (as activity deteriorated in January), the employment index declined again in February. In Q4 (2020), the factory sector managed to add 28,000 formal jobs on a quarterly basis, although employment was still down by a sizeable 171,000 jobs from a year before,” Absa said.

So a lot of factory jobs that have been lost the past year have not come back. With unemployment at historic highs and well over 40% based on its broadest definition, this bodes ill for hopes that the peak has been reached. And the manufacturing sector still faces a range of challenges, including Eskom’s unreliability and rising prices, policy uncertainty, and weak domestic demand. The PMI may not steady improvements, but the one that really counts right now is the employment side of things. DM/BM