SA business activity contracts

JOHANNESBURG. South Africa’s private sector activity contracted in December for the first time since August, as muted demand and rising inflationary pressures weighed on growth, a survey showed yesterday.

The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 49,9 in December from 50.9 in November, slipping below the 50.0 threshold that separates growth from contraction.

New orders stalled, ending a four-month growth streak, as subdued market conditions and a further decline in export business dampened sales.

“December’s PMI data suggest that the South African economy may have lost a little bit of steam at the end of 2024,” said David Owen, senior economist at S&P Global Market Intelligence.

He highlighted a “more muted demand environment” and “accelerated cost pressures” as key challenges.

Inflationary pressures intensified, with input costs rising at the fastest rate in four months, driven by higher wages and increased material and transport prices. However, the rate of inflation remained below long-term trends.

Despite the downturn, supply chain pressures eased, encouraging firms to increase input purchases for the third consecutive month.

Employment remained stable, following a slight increase in November, while output and sales contracted across most sectors, particularly in construction.

The services sector, however, showed a slight uptick in new work. — Reuters.