Zuma was sworn in on Saturday as South Africa's fourth democratically elected president following the ruling African National Congress' (ANC) April 22 landslide election victory.
He said Manuel, who was finance minister for more than a decade, would deal with financial issues, but not solely the economy.
Pravin Gordhan, who was head of the tax authority, was appointed as Manuel's replacement in a move considered to be a sign of policy continuity.
"I think the markets are going to react very positively to the naming of Gordhan as finance minister," Zuma said, but he added: "Who can predict the markets?''
The announcements were closely watched by investors for signs that Zuma's economic policy would swing to the left due to the support he received from the South African Communist Party and the labour movement.
His toughest task may be balancing the interests of South African workers, unions, and communists with those of investors.
Haru Mutasa, Al Jazeera's correspondent in Johannesburg, said the trade unionists are not happy: "They are saying they feel sidelined, that they want a more pro-left approach to the economy.
"There is a fear they will take to the streets and cause a standstill in terms of the economy. The communists and trade unionists are very powerful forces in the ANC.
"They weren’t happy with Manuel [under the previous president]. The fact that Manuel is still there under a more powerful position ... has only made them angrier.
"He [Zuma] knows he needs them the key thing is how will he manage them.
Education "a priority"
Blade Nzimande, the head of the South African Communist Party, was named minister of higher education and training.
It is not likely to give him much sway over economic policy, but could signal an important change in emphasis.
Zuma said education and training would be a priority to help blacks left behind by apartheid catch up.
Barbara Hogan was moved from health to public enterprises, and Aaron Motsoaledi, a provincial education minister from eastern South Africa, replaced her post in health.
Hogan replaced the unpopular Manto Tshabalala-Msimang after Thabo Mbeki lost a power struggle within the ANC last year and was forced to step down early as president.
While Tshabalala-Msimang was derided for promoting lemons, garlic and beets as Aids treatments, Hogan has been praised by Aids activists.
'Responsive and efficient'
Zuma also created a new cabinet post responsible for monitoring and evaluating his government's performance.
One of his promises in the run up to the elections was to make the government more responsive and efficient.
He vowed to uphold the tradition of reconciliation begun by the country's first black president Nelson Mandela, the man who led the struggle against white apartheid rule.
"He made reconciliation the central theme of his term of office," Zuma said in his inauguration speech.
"We will not deviate from that nation-building task. Thank you Madiba [Mandela] for showing us the way."
The popular Winnie Madikizela-Mandela, Mandela's former wife, did not get a cabinet post.
Mutasa said: "It was thought that Mandela would end up in the cabinet. She has a lot of support in South Africa … but she has had a shady past ... he was under a lot pressure not to include her in the cabinet.
Zuma named Kgalema Motlanthe, his predecessor, as his deputy president.
Improving the lives of the impoverished black majority has been an ANC policy promise since the party took power in the first all-race polls in 1994.
But it remains an elusive goal, hampered by a worsening economy.
Zuma will have to manage the expectations of free-market capitalists - who have typically seen their idioms take prominence in South Africa - and labour and communist allies who propose increasing fiscal spending to help those living in poverty.
"There has been a lot of maneuvering ahead of this cabinet announcement, Mutasa said.
"A lot of people feel sidelined, very unhappy. Zuma has to manage it well otherwise he may find that people aligned to him may not be."