South Africa: Business conditions deteriorate at a softer rate in June
July 3, 2019
In June, the IHS Markit Purchasing Managers’ Index (PMI) rose from 49.3 in May to 49.7 in June. Despite the improvement, the index remains below the 50-point threshold, indicating a deterioration of private-sector business conditions.
June’s upturn was mainly driven by softer drops in output and new orders compared to the previous month. Moreover, firms increased their staff levels, albeit only marginally. Meanwhile, input cost inflation rose markedly, largely reflecting a weaker rand and higher fuel prices. Rising costs were partly passed onto customers, with output charges up modestly overall. More positively, business confidence strengthened to its highest since March 2018 amid improved short-term sales expectations.
Author: Javier Colato, Economist