South African factory activity recovers amid power shortages

AFRICAN BUSINESS AND ECONOMYMarch 3, 2024 at 9:32 AM UTC

TLDR

South African manufacturing PMI rebounds to 51.7, surpassing critical 50-point threshold for expansion.
Business activity and new sales orders improve in February but remain negative.
Greater optimism towards exports seen, hinting at potential relief from local harbor disruptions.

South African manufacturing activity rebounded in February following a significant decline the previous month, as indicated by a Purchasing Managers’ Index (PMI) survey released on Friday.

The seasonally-adjusted PMI rose to 51.7 points in February, up from 43.6 in January, surpassing the critical 50-point threshold that signifies expansion.

While the business activity sub-index and new sales orders showed improvement in February, they remained in negative territory. Absa, the sponsor of the PMI, noted that respondents expressed greater optimism regarding exports, potentially indicating some relief from congestion and disruptions at local harbors.

Key Takeaways

South Africa is currently contending with unprecedented power shortages and a logistics crisis at its rail and port operator, Transnet. These challenges have severely impacted business activity and hindered growth in Africa's most industrialized economy. Recently, the government announced plans to access 150 billion rand ($7.93 billion) from a central bank-administered contingency account over the next three years to mitigate borrowing. This move comes against the backdrop of a grim economic outlook, casting a shadow over the upcoming general election scheduled for May 29, where the ruling African National Congress (ANC) faces the possibility of losing its parliamentary majority for the first time in three decades.

South Africa

Economy

Eskom

Power Crisis

Absa