CAPE TOWN, Oct 5 – South Africa’s private sector contracted at its fastest pace since December in September, with a sharp decline in new orders and renewed supply-chain disruptions weighing on business activity, according to the latest S&P Global Purchasing Managers’ Index.
The S&P Global South Africa PMI fell to 49.0 in September, from 50.5 in August. A reading below 50 indicates contraction, while a reading above 50 signals expansion.
The downturn reflected renewed declines in business activity, new orders and stocks of purchases, with companies reporting weaker demand amid higher prices and increased uncertainty over domestic and international economic conditions.
“The downturn came amid renewed contractions in business activity, new orders and stocks of purchases, as firms often reported a weaker demand environment linked to rising prices and increased economic uncertainty,” said David Owen, principal economist at S&P Global Market Intelligence.
New orders recorded their sharpest decline in two and a half years, as customers delayed spending amid uncertainty surrounding fuel prices and broader economic conditions.
Export demand provided an exception, increasing for a fourth consecutive month, offering some support to companies facing weaker domestic demand.
Supply Chain Pressures Intensify
Supply-chain constraints also deteriorated during September. Supplier delivery times lengthened at their fastest pace since February 2024, with businesses citing congestion at the Port of Durban, shipping disruptions and shortages of materials.
Employment was broadly stable, although firms reported a slight reduction in workforce numbers as weaker demand affected operating conditions.
Cost pressures remained elevated. Input-cost inflation was driven largely by higher fuel prices, while purchase-price inflation reached a three-month high.
Companies responded by increasing their selling prices at the fastest rate since June, indicating that higher input costs were increasingly being passed through to customers.
Business Outlook Improves
Despite the deterioration in current operating conditions, business expectations improved for a third consecutive month, reaching their highest level since May.
Firms expressed greater optimism that easing supply-chain constraints and lower fuel prices could support stronger output growth over the next year.
The divergence between weaker current activity and improving expectations leaves South Africa’s private sector facing near-term pressure from demand, logistics and input costs, while businesses anticipate that improved supply conditions could provide greater support for growth ahead.
