South Africa’s Business Pulse Shifts Toward Small Growth

A Modest Rebound in Growth

The private sector in South Africa showed signs of recovery in June, with the Purchasing Managers’ Index (PMI) rising to 50.5—just above the critical 50-point threshold that divides growth from contraction. While the rebound is slight—up from 49.6 in May—it signals cautious optimism among businesses.

Production & Orders Dip, But Less Sharply

• Output and new orders continued to decline for a second consecutive month, though at a slower rate than in May.
• Companies point to weak consumer spending, economic uncertainty, and persistent price pressures as key challenges.
• Exports provided a lift, with foreign orders rebounding after May’s decline.

Hiring Holds Steady Despite Challenges

• Employment grew, with firms adding both permanent and temporary staff to meet demand.
• The pace of job creation slowed slightly, but the overall hiring trend remains positive.

Work Backlogs Stay in Check

• Backlogs of unfinished work remained below the 50-point mark for the ninth straight month, suggesting manageable workloads.

Inflation Eases, But Fuel Costs Persist

• Input price inflation dropped sharply, falling nearly seven points from its 46-month high.
• Output price inflation also softened, though companies continue to pass higher fuel costs to consumers.

Supply Chains Strain Slightly

• Supplier delivery times lengthened at a faster rate than in May, reflecting slower imports and vendor constraints.
• Purchasing activity increased, and input inventories grew for the third month in a row.

The Silver Lining: Cooling Inflation

Despite ongoing challenges, the sharp decline in inflationary pressures offers a promising sign for South Africa’s economic outlook.

Key Takeaway

While growth remains fragile, the rebound in PMI and easing inflation suggest the private sector is adapting to tougher conditions—a cautious but hopeful step forward.