Johannesburg – The latest S&P Global South Africa Purchasing Managers’ Index (PMI) shows the private sector contracting at its quickest pace since December, falling to 49.0 in September from 50.5 in August. The 50‑point threshold separates growth from contraction, indicating a modest downturn in overall business activity.
Key drivers of the slowdown
Economists point to a sharp drop in new orders – the steepest decline in two‑and‑a‑half years – as customers postponed spending amid uncertainty over fuel prices and broader economic conditions both at home and abroad. Supply‑chain bottlenecks also intensified, with delivery times lengthening to their worst level since February 2024. Respondents cited congestion at the Port of Durban, shipping disruptions and material shortages as major contributors.
Cost pressures remain high
Input‑cost inflation stayed elevated, driven primarily by higher fuel prices. Purchase‑price inflation climbed to a three‑month high, and companies raised their selling prices at the fastest rate since June. Despite these pressures, employment changed little, with only a slight reduction in workforce size reported across the surveyed firms.
Bright spots amid the contraction
Even as the PMI slipped below the growth line, there were encouraging signs. Export activity bucked the domestic trend, rising for a fourth consecutive month. Business expectations improved for a third month in a row, reaching their highest level since May. Firms expressed optimism that easing supply‑chain constraints and lower fuel prices could support output growth over the next year.
What the data means for South Africa
While the contraction signals a challenging environment for manufacturers and service providers, the upward swing in expectations suggests that many companies remain confident in the country’s longer‑term economic prospects. Policymakers will need to address the fuel‑price volatility and supply‑chain snarls that are weighing on new orders, while also monitoring inflationary pressures that could erode purchasing power.
David Owen, Principal Economist at S&P Global Market Intelligence, noted that the downturn “came amid renewed contractions in business activity, new orders and stocks of purchases, as firms often reported a weaker demand environment linked to rising prices and increased economic uncertainty.”
Overall, the September PMI paints a mixed picture: a short‑term contraction tempered by improving sentiment and resilient export growth. Stakeholders will be watching closely to see whether the positive expectations translate into a rebound in activity in the months ahead.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
