South Africa: PMI falls in April but conditions still improve
The S&P Global Purchasing Managers’ Index (PMI) came in at a four-month low of 50.3 in April, down from March’s 51.4. The index moved closer to, but remained above, the 50.0 no-change mark, pointing to a slower improvement in business conditions from the previous month.
April’s slowdown was driven by the ongoing buildup of price pressures, which led consumers to reduce spending, dampening sales in turn. Additionally, the heaviest rainfall seen in decades in the KwaZulu-Natal province—the second largest contributor to national GDP—and downbeat demand weighed on activity and output. Further, the war in Ukraine and lockdowns in China continued to disrupt the delivery of supplies. Meanwhile, material shortages, elevated commodity prices—including for fuel and steel—and efforts to increase salaries to safeguard employees’ purchasing power pushed up inflation again in April. That said, demand for services remained strong. With regard to output expectations for the coming year, firms were broadly optimistic for a post-Covid-19 recovery, although supply shortages and increasing fuel prices are seen as key factors to watch. Consequently, firms onboarded more staff, increasing employment levels for the second month running.