South Africa PMI January 2021

South Africa

South Africa: PMI rises slightly in January

February 3, 2021

The South Africa IHS Markit Purchasing Managers’ Index (PMI) rose to 50.8 in January, from December’s 50.2, marking the best reading in three months. As such, the index remained slightly above the critical 50-treshold, separating expansion from contraction in business activity, albeit pointing to cooling momentum.

January’s reading largely reflected rising output, which expanded at the fastest clip since December 2016 amid an increase in new orders. That said, purchasing activity dropped for the second month straight in the month amid raw material shortages, falling freight container supply and delays at local ports. Moreover, employment fell in the first month of the new year as firms attempted to reduce wage costs, with the rate of job shedding the fastest since May last year. On the price front, input costs rose at the quickest rate since October 2018, while higher raw material costs led firms to raise output charges for the fifth consecutive month. Lastly, although the outlook for output for the coming twelve months improved in January amid hopes of an easing in coronavirus restrictions, firms’ overall expectations were muted due to concerns over high infection numbers and inflationary pressures.

FocusEconomics Consensus Forecast panelists see fixed investment growing 2.4% in 2021, which is down 0.1 percentage points from last month’s forecast. For 2022, the panel sees fixed investment expanding 3.3%.

Author:, Economist

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