JOHANNESBURG, Jan 6 – South Africa’s business activity contracted at its fastest pace in nearly a year in December as weaker demand weighed on output, new orders and purchasing activity, a closely watched survey showed.
The S&P Global Purchasing Managers’ Index fell to 47.7 in December from 49.0 in November, remaining below the 50.0 threshold that separates expansion from contraction. The reading confirms that business conditions deteriorated throughout the final quarter of 2025.
The downturn was driven by a sharp fall in output and new work, with firms citing challenging economic conditions and subdued client demand. New orders declined for a third consecutive month, marking the steepest contraction since March 2024.
Household spending softened further, while business-to-business demand also weakened. Export sales fell after a marginal increase in November, adding to pressure on overall activity.
Despite the slowdown, employment edged slightly higher for the third month in a row, suggesting firms remain cautious but are holding onto staff in anticipation of improved conditions ahead.
Input price inflation eased marginally, helped by a stronger exchange rate against the U.S. dollar. However, companies continued to face higher costs for key inputs such as fuel and vehicles.
South Africa’s rand ended 2025 nearly 13% stronger against the dollar, marking its biggest annual gain in 16 years as broad dollar weakness and improving domestic fundamentals supported the currency.
Looking ahead, businesses remained cautiously optimistic about a recovery in 2026, underpinned by expectations of better economic conditions and the rollout of new projects.
