South Africa: PMI decreases in October
The S&P Global Purchasing Managers’ Index (PMI) fell to 48.9 in October from September’s 49.9, marking the weakest result since July. As such, the index fell further below the 50.0 no-change threshold, signaling a sharper deterioration in private-sector operating conditions compared to the previous month.
October’s deepening of the previous month’s deterioration was driven by output contracting at the steepest pace in five months on weak demand and supply-side constraints. Moreover, domestic spending was depressed due to continued elevated inflation and higher fuel prices, which restrained customer spending and dampened new orders in turn. Meanwhile, employment levels increased for the third consecutive month, though at the slowest rate in the growth sequence. The onboarding of staff was due to improving business sentiment, reflecting expectations of an increase in activity.
Turning to prices, a fall in operating costs more than offset stronger fuel price pressures as the rate of input cost inflation cooled to a two-year low. Nevertheless, selling prices rose at the quickest pace in three months.
David Owen, senior economist at S&P Global Market Intelligence, expects input cost inflation to pick up and noted:
“Output charges continued to rise at an above-average rate, signaling that consumer prices will continue to rise rapidly as firms pass on previously-absorbed cost burdens.”