South Africa: PMI increases in September and conditions improve for first time in three months
October 5, 2021
The IHS Markit Purchasing Managers’ Index (PMI) broke through the neutral 50-threshold for the first time in three months, rising to 50.7 in September from August’s 49.9, which signaled an improvement in business operating conditions compared to the month prior.
September’s improvement was largely due output expanding for the first time in four months on the back of more favorable economic conditions and a pickup in demand. Moreover, the easing of some Covid-19 restrictions supported a mild increase in sales and pushed business confidence up to an over six-year high. However, persistent supply shortages continued to weigh on activity, dragging output and foreign demand. Following the lockdown-induced downturn, firms let go of staff in a bid to reduce costs. Turning to prices, cost inflation picked up for the first time in four months, due to a stronger U.S. Dollar and higher prices for energy and inputs, especially steel. Firms largely passed on the increase in costs to clients.
Author: Marta Casanovas , Junior Economist