South Africa’s private sector remained in expansion territory for a second consecutive month in July, although growth eased slightly as slower hiring and declining inventories offset a modest recovery in business activity.
The latest S&P Global South Africa Purchasing Managers’ Index (PMI) slipped to 50.3 in July from 50.5 in June. A reading above 50 indicates expansion, while a figure below that level signals contraction.
Business activity returned to growth for the first time in three months, ending a two-month decline. However, the increase was only marginal as demand remained subdued.
Key findings from the survey include:
- Employment growth slowed to its weakest pace in six months despite a rise in outstanding work.
- New orders declined for a third straight month, reflecting cautious consumer spending, protests and increased competition from lower-priced imports.
- Export demand increased for a second consecutive month, although growth was weaker than in June.
- Supplier delivery times lengthened for a seventh month, but the disruption was the mildest since February.
- Lower fuel prices helped ease cost pressures, reducing input price inflation and limiting wage-related cost increases.
S&P Global Market Intelligence Principal Economist David Owen said lower operating costs provided some relief for businesses after a difficult second quarter, but weak customer demand and challenging trading conditions continued to weigh on overall performance.
The survey suggests that while business conditions have improved modestly, firms remain cautious as domestic demand continues to face pressure.
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