South Africa: PMI drops to three-month low in June, hinting at slowdown in private sector activity
The South Africa IHS Markit Purchasing Managers’ Index (PMI) came in at 51.0 in June, down from May’s 53.2. Although the index remained above the 50-threshold, signaling an improvement in business conditions from the previous month, it suggests a loss of momentum in private sector activity at the tail end of Q2.
June’s reading largely came on the back of the first contraction in output in six months as the tightening of coronavirus restrictions held back demand. Moreover, new orders growth was halted in June and export orders fell for the first time in three months. That said, firms raised staff levels at the fastest pace since November 2012 amid a sharp increase in backlogs of work. On the price front, input cost inflation continued its upward trend due to supply issues and higher salary costs. Output charges also rose but at the slowest rate in three months. Lastly, sentiment among firms weakened for the second consecutive month amid increased concerns that reimposed Covid-19 containment measures would hamper activity.