The economy slowed down in December 2024, as reflected in the S&P Global SA purchasing managers’ index (PMI), which eased to 49.9 from 50.9 in November.
This slight contraction was the first dip in business activity in four months.
According to sector data, weakness in the private sector was broad. The construction sector had the most significant drops in output and sales, while the services sector recorded a modest increase in new work.
After the first rise in six months in November, job numbers were held largely stable in December. But input costs surged sharply due to higher pay, materials and transportation expenses.
As a result, companies passed these higher costs on to consumers, driving up prices for everyday goods and services.
On a more positive note, supply chain delays eased, enabling goods to arrive faster and at lower cost. This development could help stabilise prices in future.
According to surveyed companies, a third of businesses remain optimistic about growth in 2025, though this sentiment waned since multiyear highs observed in August.
While the economy may have lost some momentum towards the end of 2024, improvements in supply chains and long-term optimism provide reasons for cautious optimism, said David Owen, senior economist at S&P Global Market Intelligence.
“The final quarter of 2024 was an encouraging one for businesses on the whole. The fourth quarter PMI average of 50.5 is the strongest recorded since Q3 2022, which gives some confidence that GDP growth will improve after a contraction last quarter.
“Inflation metrics, despite rising, are still comfortably below their long-run trend levels and there is little at present to imply these will pick up sharply in the near term.”
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