SA’s private sector economy continued to show modest improvement in August, supported by easing cost pressures, stronger output and increased purchasing activity, according to the latest S&P Global SA purchasing managers’ index (PMI).
The PMI registered 50.1 in August, down slightly from 50.3 in July, marking the fourth consecutive month above the 50-point threshold that separates growth from contraction.
Input prices rose at the slowest pace in 10 months, as a stronger rand helped ease import costs and wage pressures softened. This sharp easing in cost inflation was a key factor behind the modest improvement in business conditions during August.
“The latest data offers some hope that official CPI inflation may soften in August after reaching a 10-month high of 3.5% in July,” said David Owen, senior economist at S&P Global Market Intelligence. “Nevertheless, the overall growth picture remains tepid.”
According to Owen, the easing of cost pressures for SA businesses was a positive sign for the private sector economy, suggesting that the acceleration seen in June and July might be temporary.
“Firms reported that the gradual improvement in exchange rates had begun to alleviate cost burdens on imported items, although rising prices for fuel and food remain a concern,” he said.
For the first time since May, companies reported a rise in output levels, with firms attributing the uptick to improving demand and the launch of new projects. Output growth was modest but the second-fastest recorded in two years.
However, sales growth softened in August, as domestic demand slowed and export orders declined for a fifth month in a row. Respondents cited continued difficulty trading with US clients due to tariff-related disruptions.
After two months of job gains, private sector employment declined slightly in August. Several firms opted not to replace departing staff.
Despite slower hiring, purchasing activity accelerated, with firms increasing input buying at the fastest pace since October 2024. This led to a slight uplift in inventories, as companies prepared for future demand.
Supply chains also continued to improve, after domestic port delays caused disruptions last year. According to the survey, delivery times shortened for a fifth straight month — the longest streak of improvement in the survey’s history.
Selling price inflation was largely unchanged from the previous two months and remained weaker than the long-term average. Firms noted that while they passed some cost increases on to customers, pricing power remained limited in the face of soft demand.
Looking ahead, businesses remained upbeat, with confidence about future output staying strong despite a slight dip from July. Firms expressed optimism about sales prospects and broader market recovery, but some raised concerns about global trade uncertainty and the ongoing effects of US tariffs.
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