South Africa: Private-sector conditions improve marginally in December
The S&P Global Purchasing Managers Index (PMI) moderated to 50.2 in December, down from Novembers 50.6. As such, the index moved closer to, but remained above, the 50.0 no-change mark, signaling a slight improvement in private-sector operating conditions from the previous month.
The tenth consecutive increase in employment levels—and the strongest in three months—combined with longer supplier delivery times drove Decembers marginal improvement in conditions. Meanwhile, new orders fell again in December; domestic client demand remained depressed amid still-high inflationary pressures and continued load shedding. Additionally, softer global demand prompted another decline in export orders. Coupled with power cuts capping activity, this led output levels to fall for the fourth consecutive month in December.
Turning to prices, cost inflation in December was the softest in nearly two years. That said, prices still rose sharply due to rand weakness, higher fuel prices and supplier shortages. As such, output charges rose again in December, but at a milder pace than in previous months. Thanks to moderating price pressures, firms sentiment regarding production in the coming year was robust, although output projections still dipped to a five-month low.