South Africa: Private-sector business conditions deteriorate in June
The S&P Global South Africa Purchasing Managers Index (PMI) fell to 49.2 in June from 50.4 in May. As a result, the index fell below the 50.0 no-change threshold, and signaled a deterioration in private-sector operating conditions compared to the previous month.
June’s downturn was primarily due to output and new business declining at the steepest clips in three months, as companies reported weaker client demand linked to political uncertainty following the inconclusive results of the general election. This decrease in sales prompted businesses to reduce their input purchases, resulting in the first drop in inventory levels in 2024, and a mild cut in employment numbers, attributed mainly to the non-replacement of leavers.
Input inflation fell to its lowest level in nearly four years, contributing to the softest rise in output prices since late 2020. This was partly due to a stronger rand and reduced fuel prices. Despite the overall downturn, business sentiment improved to a four-month high, driven by expectations of demand recovery post-election, new client relationships and easing inflationary pressures.