South Africa

South Africa PMI May 2023

South Africa: PMI records worst reading since July 2021 in May

The S&P Global Purchasing Managers’ Index (PMI) came in at 47.9 in May, down from April’s 49.6. May’s result marked the worst performance since July 2021. As a result, the index fell below the 50.0 no-change threshold for the third month running, signaling a sharper deterioration in private sector operating conditions compared to the previous month.

Load shedding—the emergency cutting of electricity supply by utility companies—remained the main driver of May’s downturn. Output contracted for an eighth consecutive month and to the greatest extent since July 2021. Moreover, new order volumes declined at the speediest rate since January. Turning to prices, input cost inflation accelerated, leading to rapid output inflation. More positively, staffing levels rebounded slightly, while supply chain issues waned, leading to a lower increase in supplier delays. Meanwhile, business sentiment remained optimistic due to expectations of improved demand.

Commenting on the outlook, David Owen, Senior Economist at S&P Global, said:

“The bleak energy outlook over the winter suggests that more companies will look for alternative electricity sources, pushing costs and customer prices even higher. Weak demand trends are thus likely to continue, leading to additional falls in business activity.”

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