South Africa’s private sector has emerged from a difficult downturn, recording a slight uptick in sales that has reignited activity and employment.
The S&P Global South Africa Purchasing Managers’ Index (PMI) released on Tuesday reported a rise to 50.0 in April—a neutral mark that separates growth from contraction—marking a notable increase from last month’s figure of 48.3.
This signals a shift after four consecutive months spent in negative territory.
Key to this recovery has been the much-anticipated improvement in sales, resulting in increased new orders, output, and employment figures.
David Owen, senior economist at S&P Global Market Intelligence, said the PMI print in April was better news for South African businesses as the second quarter began.
Owen said that a sustained decline in operating conditions across the first quarter suggested that GDP growth has softened, but early signs for the second quarter were more promising.
“Not only did demand conditions pick up, but supply-side conditions were healthier. Overall delivery times shortened for the first time in nearly two years and at the quickest pace since the end of 2018,” Owen said.
“The data signal that the lengthy disruption from Durban’s port congestion has finally subsided, which should support businesses in their efforts to increase output. Volatility in the rand especially during the first half ofApril made its mark on prices, with purchase prices risingat the fastest rate since last August.
“The currency market may face further choppiness as firms await clarity on the national budget and global trade conditions amid US tariff announcements. These uncertainties partly weighed on output expectations, although in general firms remain confident about the year ahead.”
For the first time since November 2024, new orders have also registered a growth, albeit fractional.
While some businesses enjoyed an influx of larger orders, new contracts, and the benefits of marketing strategies, others found themselves grappling with decreased customer spending amidst a backdrop of heightened economic uncertainty.
The upswing in activity was especially pronounced within the services sector, which saw robust sales growth that bolstered overall output. The wholesale and retail as well as the construction sectors also experienced modest increases; however, the industry sector lagged behind as production fell short of the previous month’s performance.
Alongside improvements in demand, the private sector welcomed a gradual recovery in supply chain dynamics. After a prolonged period of disruption primarily due to port congestion, the survey data indicated that suppliers’ delivery times shortened for the first time since June 2023.
Enhanced efficiency at the Port of Durban and the strategic return to previous vendors have helped alleviate bottlenecks, spurring an increase in purchasing activity for essential materials and components for the first time in four months.
Employment in the private sector has also seen a resurgence, with job creation recorded in April for the first time in 2025. Though the pace of growth remains marginal, it reflects shifting dynamics—some businesses reported increasing their workforces to enhance capacity, while others executed retrenchment measures.
This conflicting trend occurred against a backdrop of diminishing outstanding work, a phenomenon consistent for eight months running, where firms have managed to stay ahead of their workloads.
However, not all news is positive. A concerning spike in input price inflation was noted, which jumped to an eight-month high. The depreciation of the exchange rate against the US dollar exacerbated the situation, driving up business costs significantly.
In contrast to input price pressures, wage inflation has remained comparatively subdued, reflecting its lowest rate in six months. In response to rising costs, selling prices experienced a modest increase, primarily influenced by the industry and wholesale and retail sectors.
Despite the encouraging figures for activity and new business, firms expressed diminishing optimism for the future, with expectations slipping further to their second-weakest levels in 19 months.
Political uncertainties, both domestically and internationally, loom large, contributing to this lower sentiment. Yet, a glimmer of hope remains, with approximately 40% of respondents still maintaining a positive outlook for future activity.
BUSINESS REPORT
