JOHANNESBURG, June 3 – South Africa’s private sector returned to contraction in May as rising fuel costs and geopolitical uncertainty weighed on business activity, according to the latest Purchasing Managers’ Index survey from S&P Global.
The headline PMI fell to 49.6 in May from 51.6 in April, dropping below the 50-point threshold that separates expansion from contraction.
The decline signals a deterioration in overall business conditions across Africa’s most industrialized economy after a brief period of growth earlier in the year.
According to the survey, companies reported weaker output levels and a slowdown in new orders as businesses and consumers became more cautious amid growing economic uncertainty.
Higher fuel prices, driven by tensions in the Middle East and volatility in global energy markets, continued to place pressure on operating costs and business activity.
The softer performance highlights the challenges facing South African firms as elevated transportation and input costs filter through the economy.
Businesses also cited uncertainty surrounding the broader global economic environment as a factor affecting customer demand and investment decisions.
Despite the weaker operating conditions, the survey revealed a notable improvement in business sentiment.
Companies expressed stronger confidence about the outlook for the next 12 months, with optimism reaching its highest level so far in 2026.
S&P Global attributed the improved sentiment to expectations of future business opportunities, planned marketing and advertising initiatives, and hopes that economic conditions will stabilize in the months ahead.
Many firms also reported healthy pipelines of prospective work, suggesting that while current demand has softened, businesses remain optimistic about future growth prospects.
The latest PMI data underscores the mixed picture facing South Africa’s economy, where near-term pressures from inflation, energy costs and geopolitical risks are weighing on activity, even as businesses maintain confidence in a potential recovery later in the year.
