South Africa’s private sector maintained its growth trajectory in October, bolstered by a decline in business costs and selling prices, according to a purchasing managers’ index (PMI) survey released yesterday.
The S&P Global South Africa PMI fell to 50.6 in October 2024, down from a 13-month high of 51.0 in September, indicating continued, but marginally slower private sector growth, the S&P website showed.
The continued private sector expansion was also reflected by the release on Monday of Standard Bank’s PMI, which had stayed above the 50.0 mark, signalling expansion, due to factors including eased load-shedding, interest rate cuts, and stronger performance of the rand., although there remains economic challenges, said TreasuryONE Currency Strategist Andrew Cilliers in a note.
The S&P Global South Africa PMI showed business activity and new orders rose for the second month, driven by improved economic conditions and increased sales.
However, the pace of expansion for new orders slowed to a marginal rate, with only two of the four broad sectors reporting sales growth.
Despite these operational improvements, firms continued to reduce staffing, extending the current decline to five months.
On the pricing front, input costs dropped due to lower fuel prices and a stronger rand, causing selling prices to fall at the fastest rate since July 2020.
Business confidence improved, strengthened by expectations arising out of reduced load-shedding, political stability, and lower interest rates.
New orders continued to grow, marking the longest period of expansion since mid-2022, although the pace slowed.
The growth was mainly driven by the industry and wholesale & retail sectors, while construction and services lagged.
“October was another strong month for the South African economy,” said David Owen, senior economist at S&P Global Market Intelligence.
“The survey data also provided further evidence that inflationary pressures are falling,” he said.
Business confidence improved, with 52% of respondents expecting output to rise over the next year, citing political stability and improved power availability as key factors. Nonetheless, challenges remained, with delivery delays persisting due to domestic port congestion, the survey showed.
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