JOHANNESBURG, July 3 – South Africa’s private sector returned to modest growth in June, supported by easing inflationary pressures, although business activity remained constrained by weak demand and a second consecutive monthly decline in output and new orders.
According to the latest S&P Global South Africa Purchasing Managers’ Index (PMI), the headline index rose to 50.5 in June from 49.6 in May, moving back above the 50-point threshold that separates expansion from contraction.
Despite the improvement in the overall index, businesses continued to report weaker operating conditions. Both output and total new orders declined for a second straight month, although the pace of contraction eased compared with May.
Survey respondents attributed softer sales to constrained consumer spending, persistent economic uncertainty and elevated prices, which continued to weigh on customer demand.
External demand, however, provided some support during the month. New export orders returned to growth after declining in May, while the services sector was the only category monitored to record an increase in new business.
Employment remained resilient, with firms continuing to recruit both permanent and temporary workers to expand operating capacity. Although the pace of hiring slowed slightly compared with the previous month, businesses maintained positive employment trends despite subdued demand.
Outstanding business, measured through backlogs of work, remained broadly unchanged but stayed below the neutral 50-point mark for a ninth consecutive month, indicating that firms continued to operate with spare capacity.
One of the most encouraging developments was a significant easing in cost pressures. S&P Global reported that input price inflation slowed sharply after reaching a 46-month high in May, with the input prices index falling by nearly seven points during June.
Output price inflation also moderated from its highest level in almost four years, although many businesses said they continued to pass higher fuel costs on to customers.
The latest survey suggests that while South Africa’s private sector has returned to growth, the recovery remains fragile. Softer inflation is providing some relief for businesses, but weak domestic demand and ongoing economic uncertainty continue to limit stronger expansion across the economy.
