South Africa: Conditions improve at strongest pace in over a year in June
July 5, 2022
The S&P Global Purchasing Managers’ Index (PMI) increased to a 13-month high of 52.5 in June, up from the prior month’s 50.7. Consequently, the index moved further above the 50.0 no-change mark, pointing to a stronger improvement in business conditions from the previous month.
June’s upturn was driven by the economic recovery following the devastating floods in the KwaZulu-Natal province in April. Activity expanded at the strongest pace since May 2021 in June. Moreover, employment levels increased solidly, which led to a backlog reduction. That said, the overall improvement was capped by the continued rise of price pressures. Thus, to shield themselves from potentially higher inflation in the coming months, firms accelerated their input purchasing activity, leading to the strongest increase in stock levels in over five years. Meanwhile, raw material supply delays continued amid the ongoing war in Ukraine and lockdowns in China. Lastly, firms’ sentiment remained downbeat due to concerns over the war and inflation, although it improved from May.
Author: Marta Casanovas , Economist