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The S&P Global SA Purchasing Managers’ Index (PMI) fell to 49.2 in June from 50.4 in May. A reading below 50 indicates contraction. Business conditions deteriorated in tandem with the quickest fall in output in three months and a drop in new order volumes for the fourteenth month in a row. The index is a composite gauge designed to give a single-figure snapshot of operating conditions in the private sector economy.
The S&P Global SA Purchasing Managers’ Index (PMI) fell to 49.2 in June from 50.4 in May. A reading below 50 indicates contraction. Business conditions deteriorated in tandem with the quickest fall in output in three months and a drop in new order volumes for the fourteenth month in a row. The index is a composite gauge designed to give a single-figure snapshot of operating conditions in the private sector economy. PMI signaled a cooling of price pressures on private sector businesses at the midpoint of the year, leading to the softest rise in input costs since August 2020. The slowdown followed reports of a positive impact from strengthening exchange rates on the rand and steadily reducing fuel prices, which also resulted in a weaker increase in selling prices. Nevertheless, business conditions across SA deteriorated for the first time in three months in June amid sharper falls in output and new business, as firms often noted a degree of client hesitancy due to uncertainty around the election outcome.
The decline led to renewed drops in purchases and staffing, although confidence in the outlook improved to a four-month high, stated the rating agency. The index was consistent with a marginal deterioration in the health of the private sector. Four of the five sub-components of the PMI (which does not include prices) indicated a worsening of operating conditions during June, including renewed drops in employment and stocks of purchases.
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Output and new orders fell at their quickest rates since March, as survey panellists often highlighted weaker client demand due to political uncertainty following the general election. Positively, new orders from abroad picked up marginally for the second month running. With sales declining, businesses reduced their input purchases during June, leading to the first drop in inventory levels in 2024.
