South Africa: PMI increases and conditions improve in January
The IHS Markit Purchasing Managers’ Index (PMI) increased to 50.9 in January from December’s five-month low of 48.4. As such, the index broke through the neutral 50-threshold, signaling an improvement in business conditions from the previous month.
January’s upturn was due to demand improving as Covid-19 cases dropped, leading to more new business in the services and industry sectors. That said, supply bottlenecks continued to restrain output and client orders. Additionally, deliveries were delayed again in January, while backlogs of work decreased for the second month running. As capacity was not fully used, employment levels fell slightly. Turning to prices, input costs increased again on higher prices for raw materials, fuel, transport and salaries. The extra costs were passed on to customers, prompting higher output prices. Lastly, firms’ expectations climbed to an over seven-year high in January, bolstered by the relatively short and less disruptive Omicron wave.