South Africa’s Business Pulse Shifts Toward Small Growth

The private sector in South Africa nudged back into growth during June, according to a recent survey. The Purchasing Managers’ Index (PMI) climbed to 50. 5 from 49. 6 in May, just over the 50‑point line that separates expansion from contraction. This modest rise shows companies are hiring more, even though overall production and new orders fell for a second month. The slowdown in output and order growth is less steep than it was in May, suggesting that businesses are holding steady despite weaker sales. Many firms blame the dip on customers spending less, an uncertain economy, and still‑high price pressures. Exports helped a bit: foreign orders edged up after dropping in May, and the services sector became the only area that saw new work grow.

Employment kept gaining, with firms adding both permanent and temporary staff to boost capacity. The pace of job creation slowed slightly, but the overall hiring trend remains positive. Backlogs stayed below the 50‑point mark for a ninth consecutive month, indicating that work waiting to be done remains manageable. Inflation is cooling sharply. The index for input prices fell almost seven points from its 46‑month peak, and output price inflation also eased. Still, companies report that higher fuel costs are being passed on to customers. Delivery times for suppliers lengthened a touch faster than in May, reflecting slower imports and limited vendor capacity. Meanwhile, purchasing activity rose and input inventories grew for the third month in a row. The key takeaway is that while challenges persist, the sharp drop in inflationary pressures offers a silver lining for South Africa’s economy.

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