South Africa

South Africa PMI January 2020

South Africa: Private sector activity up a notch in January

The IHS Markit Purchasing Managers’ Index (PMI) rose to 48.3 from 47.6 in December, which had marked a 14-month low. Nevertheless, it remained below the critical 50-threshold that separates deterioration from improvement in private sector business conditions, where it has been for the past nine months.

A softer decline in output and new orders were largely behind January’s improvement, as the first upturn in new export orders since last August cushioned flagging domestic demand. That said, businesses reduced their staff levels at the quickest pace since September 2017. On the price front, both input and output prices rose sharply in the first month of 2020. Meanwhile, the outlook for business activity improved to a seventh-month high in January.

With regards to January’s developments, David Owen, Economist at IHS Markit, noted:

“Entering the new year, businesses were noticeably more upbeat toward the year-ahead outlook for activity. The level of sentiment was at its strongest since last June, as firms hope for improving market conditions as government plans for Eskom and infrastructure spending begin to take shape. Nonetheless, it will likely take some time before long-term government policy positively affects markets.”

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