South Africa: Private sector conditions improve at strongest pace in a year in August
The S&P Global Purchasing Managers’ Index (PMI) rose to a one-year high of 51.0 in August, up from the prior month’s 48.2. As such, the index broke through the 50.0 no-change threshold for the first time since February, signaling an improvement in private sector operating conditions compared to the previous month.
August’s upturn was largely due to output growing for the first time in a year amid improving demand conditions. In addition, employment levels rose, with the job creation rate accelerating to a near one-year high. Meanwhile, new orders fell at the slowest pace in four months, but load shedding and the ongoing cost-of-living crisis continued to weigh on sales.
Turning to prices, input cost inflation eased to the softest rate since January. Consequently, selling charges increased at the slowest rate in six months. Still, a weak South African rand against the U.S. dollar and supply disruptions—partly due to taxi strikes—continued to drive price pressures in the month. Lastly, while firms’ sentiment regarding expectations for the year ahead remained strong, they eased from July’s nine-month high. Expectations of receding inflation aiding demand and reduced load shedding underpinned firms’ confidence.