South Africa’s Private Sector Stabilises as PMI Hits Neutral Mark

After months of sluggish performance, South Africa’s private sector finally showed signs of stabilisation in April 2025, offering a much-needed breather for businesses and policymakers alike. According to the latest S&P Global South Africa Purchasing Managers’ Index (PMI) report, the index climbed to 50.0 in April, up from 48.3 in March.

While a 50.0 reading marks the neutral point between contraction and expansion, it is the first time since November 2024 that business conditions have not worsened—signalling a tentative return to stability.

A Modest Uptick in Demand and Output

The report points to growing new orders, improved output, and rising employment, with businesses seeing a small but encouraging lift in sales. Analysts attribute the uptick to larger client orders and more aggressive marketing efforts. However, broader economic uncertainty continues to curb spending enthusiasm.

“The rebound in new business is welcome, but fragile,” said David Owen, senior economist at S&P Global Market Intelligence. “It’s clear that uncertainty—both domestic and global—is still influencing how consumers and businesses behave.”

Supply Chains Strengthen as Port Congestion Eases

One of the more positive developments lies in supply chain improvements, with supplier delivery times shortening for the first time since June 2023. Reduced congestion at Durban’s ports played a key role in helping firms replenish inventories, and purchasing activity increased for the first time in four months.

This logistical recovery may offer hope to import-heavy industries, many of which have faced significant delays and cost pressures in recent months.

Rising Input Costs Driven by Rand Volatility

Not all the news is rosy. Businesses reported a sharp rise in input costs, driven primarily by a weaker rand against the U.S. dollar during early April. This pushed price pressures to an eight-month high, with volatility in the currency market making it harder for firms to plan confidently.

“Volatility in the rand especially during the first half of April made its mark on prices,” Owen noted.

Outlook Dented by Political Uncertainty

Despite stabilising indicators, business confidence for the year ahead dipped, with firms expressing unease over domestic political conditions and global instability. With national elections looming and geopolitical tensions continuing abroad, many businesses remain cautious in their forecasts.

A Fragile but Welcome Turnaround

April’s PMI data suggests that South Africa’s private sector may be turning a corner, but caution remains the operative word. For now, businesses will welcome any signs of stability, especially after a prolonged period of contraction. The challenge ahead lies in maintaining momentum amid inflationary pressures, currency volatility, and political uncertainty.

{Source: Market Screeener}

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