South Africa: Private sector improves in April amid optimism
The S&P Global South Africa Purchasing Managers’ Index (PMI) improved to 50.3 in April from 48.4 in March. As a result, the index moved above the 50.0 no-change threshold, and signaled a renewed improvement in private sector operating conditions compared to the previous month.
April’s uptick was due to milder contractions in new orders and output, partly thanks to softer load shedding. Still, election-related uncertainty and demand weakness continued to restrain consumer spending. Moreover, job creation was the joint-strongest since September 2022. Meanwhile, there was a notable improvement in supply chains, leading to the lowest increase in delivery times since July of the previous year and enabling companies to increase their stocks of inputs significantly.
Regarding prices, input costs continued to rise sharply, driven by higher energy and fuel prices and currency weakness, although the rate of inflation eased slightly from the previous month. Conversely, selling price inflation accelerated to a six-month high. Despite these cost pressures, business confidence improved, with companies expecting business activity to expand over the coming year. This optimism was partly based on hopes for an improvement in economic conditions after the elections.