South Africa: PMI improves but remains in contractionary territory in October
November 3, 2022
The S&P Global Purchasing Managers’ Index (PMI) rose to 49.5 in October, up from the prior month’s 49.2. As a result, the index moved closer to but remained below the 50.0 no-change mark, signaling a milder deterioration in private-sector business conditions from the previous month.
October’s improvement came largely amid milder—albeit still sharp—contractions in output and new orders. In addition to weaker client demand, higher operating costs and load-shedding capacity cuts hurt production. Additionally, new orders also declined in October, as higher price pressures undermined consumption. This led employment levels to be broadly flat in October. Meanwhile, delivery times lengthened markedly due to Transnet strikes in ports. With regard to prices, a weaker South African rand and higher energy bills pushed input cost inflation up, whereas selling prices rose at a marginally quicker pace. Nevertheless, firms remained optimistic over output expectations for the coming 12 months, although they pointed at inflation and load shedding as risks.
Author: Marta Casanovas, Economist