South Africa: Private-sector conditions deteriorate in January
The S&P Global Purchasing Managers’ Index (PMI) deteriorated to a 13-month low of 48.7 in January, down from December’s 50.2. As such, the index fell below the 50.0 no-change mark, signaling a deterioration in private-sector operating conditions form the previous month.
January’s deterioration came on the back of new orders declining at the sharpest pace in over a year. Load shedding and poor domestic and global economic conditions dampened demand. Consequently, output was reduced for a fifth consecutive month and at the steepest pace since September. Turning to prices, data was more positive. A stronger rand against the U.S. dollar and reduced shipping fees led to the slowest increase in purchase prices in nearly two years; input inflation hence eased to a 15-month low in January. In turn, firms raised their output prices at the softest rate since August 2021.
The positive price developments helped maintain overall optimism among firms. However, sentiment slipped to a six-month low amid concerns about continued load shedding and the impact it will have on demand. Still, firms’ optimism led to yet another increase in employment.