Private-sector activity increased for the first time in three months reflecting a slight recovery in demand, which led to an increase in new business volumes, a survey said on Monday.
The S&P Global SA purchasing managers’ index (PMI), a composite gauge designed to give a single figure snapshot of operating conditions in the private-sector economy, increased to 50.6 in November from 49.5 in October following a two-month contraction.
"The PMI was back above the 50.0 neutral mark in November, thereby ending a two-month sequence of declining operating conditions in large part due to the national load-shedding programme. That said, load-shedding remained a key feature of the latest survey and meant that output levels continued to fall despite a slight upturn in new orders,” economist at S&P Global Market Intelligence David Owen said.
Readings above 50 indicate growth in activity and those below 50 show a contraction. The index looks at variables such as new orders, output, employment, supplier delivery times, inventories and prices.
Owen said the turnaround in SA’s private-sector health was largely due to a renewed increase in new-business volumes.
“November data signaled a rise in sales for the first time since August,” Owen said and added that growth was only marginal.
He said while some firms saw an increase in client demand, others continued to report weak economic conditions both domestically and worldwide, as well as the negative effects from load-shedding .
The private-sector makes up more than 70% of the SA economy and accounts for at least 75% of the country’s employed workforce, as well as the majority of investment.
Unlike the Absa PMI, which tracks activity in the manufacturing sector, the S&P PMI tracks business trends across the private sector, including mining, manufacturing, services, construction and retail, based on data collected from a representative panel of about 400 companies.
Data shows inflationary pressures showed further signs of softening, as purchase prices rose at the slowest rate since August 2021, leading to a weaker uplift in output charges.
New orders rose for first time in three months and the increase in new orders encouraged companies to add to their employment numbers during November, after registering broadly stable job levels in October.
Owen said hiring growth was centred on service providers, with decreases seen in industry, wholesale and retail and construction.
Data showed that SA businesses remained markedly upbeat about future activity in November. Half of all surveyed firms predicted output to expand over the next year, against 7% that expect a decline, amid expectations that disruption from load shedding will ease and price pressures will continue to soften.
On the negative side, supply conditions remained weak, and with firms beset by load shedding, output fell for the third straight month.
"Supply chains remained disrupted by load shedding and the recent strikes at Transnet, leading to a further sharp lengthening of delivery times,” Owen said.
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