South Africa: PMI stable in February; conditions continue to improve
The IHS Markit Purchasing Managers’ Index (PMI) was stable in February, coming in at January’s 50.9. Consequently, the index remained slightly above the 50-threshold, signaling a continued improvement in business conditions from the previous month.
February’s outturn was due to output returning to growth for the first time since November 2021—albeit only marginally. Moreover, new orders expanded at the quickest pace in nine months, largely on strengthening domestic demand, as orders from abroad continued to shrink. Meanwhile, firms were still restrained by lingering supply shortages and shipping delays. Regarding staff, employment levels dropped for a third consecutive month, amid reduced workloads brought about by the Omicron Covid-19 wave. Turning to costs, higher prices for fuel, raw materials, freight and payrolls contributed to still-elevated cost inflation in February, leading to the sharpest increase in output prices since May last year. Lastly, firms remained optimistic with regard to output growth as they expect improving market conditions; sentiment hit its highest reading since November 2014.