South Africa

South Africa PMI December 2020

South Africa: PMI ticks down in December

The South Africa IHS Markit Purchasing Managers’ Index (PMI) ticked down to 50.2 in December from November’s 50.3. Consequently, the index remained slightly above the critical 50-threshold, separating expansion from contraction in business activity; however, pointing to a cooling momentum.

In December, new orders reflected broadly stable sales volumes. However, falling export sales weighed on the overall volume of new busines. Output remained broadly unchanged in the month amid stable demand conditions. Purchasing activity fell for the first time in four months as firms’ buying decisions were impacted by shortages of inputs. Meanwhile, employment fell at the weakest pace in nine months in December. On the price front, input cost inflation moderated to the slowest since August, while wage costs rose for the first time since March. Lastly, firms’ expectations over the outlook for the coming twelve months were the lowest since August in December amid worries that a second wave of coronavirus and input shortages could slow the economic recovery. That said, sentiment remained positive overall.

Commenting on the outlook for the South African economy, David Owen, economist at IHS Markit, reflected:

“While PMI data over the fourth quarter of 2020 points to an easing to the downturn, demand indicators suggest that the economy has far to go to recover from the pandemic. Moreover, should restrictions be reimposed, the country could face a second decline in activity over the first quarter of 2021.”

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