The S&P Global South Africa Purchasing Managers’ Index (PMI) dropped to 48.3 in March, down from 49.0 in February, marking the second-lowest reading since July 2023. The index remained below the 50.0 threshold, indicating a continued contraction in private sector activity.
Key Factors Behind the Decline
- Falling Output: Businesses reported a steady decline in production due to lower new orders, completed contracts, and reduced consumer spending.
- Weak Demand: New orders dropped sharply amid economic and political uncertainty, though international demand saw a slight improvement, particularly from African markets.
- Business Confidence Dips: Firms cited concerns over domestic fiscal policy and global trade conditions, leading to weaker investment and spending.
Silver Lining: Easing Cost Pressures
Input price inflation hit a five-month low, partly due to a stronger rand exchange rate. This allowed some businesses to reduce selling prices for the first time since October 2024, offering slight relief amid weak demand.
Expert Insight:
“The March PMI confirms a full quarter of declining business conditions in South Africa’s private sector,” said David Owen, Senior Economist at S&P Global Market Intelligence. “Persistent demand weakness, fiscal uncertainty, and global trade risks continue to dampen confidence and spending.”
Outlook for South Africa’s Economy
With three consecutive months of contraction, South Africa’s private sector faces ongoing challenges. The slight improvement in export demand may provide some support, but domestic economic and policy uncertainties remain key hurdles to recovery.
Stay updated on South Africa’s economic trends and business climate with the latest PMI insights.
