The S&P Global purchasing managers index (PMI) for March, due out on Tuesday, will start off a fairly thin data week which will be cut to just four days because of Monday’s Easter public holiday.
Some economists are expecting a dip in the index to 48.7 after the PMI was unchanged at 50 in February. This would suggest the gauge is resuming the weakness seen at the end of 2025.
The S&P Global PMI is a monthly survey-based indicator of private-sector business conditions, measuring activity across manufacturing and services including output, new orders, employment, suppliers’ delivery times as well as input costs and output prices.
Businesses are nervous about the long-term impact of the Middle East conflict on global oil prices, and by extension operating costs, particularly if it continues for much longer.
On Thursday, the South African Reserve Bank will release foreign exchange reserves data for March after gross reserves rose to a new record high of $81.06bn in February from $80.193bn in January.
The monthly data shows the stock of foreign assets the country holds, including foreign currency holdings, gold reserves, special drawing rights from the IMF as well as the reserve position at the fund.
Later on Thursday, Statistics South Africa will publish its manufacturing activity report for February. Factory output decreased by 0.7% year on year in January after shrinking 1.5% in December.
“Weakness in manufacturing is expected to extend into February, with output likely to contract by 0.1% year on year,” Nedbank said in an economic note. “Subdued demand, a high-cost operating environment and regulatory pressures continue to weigh on the sector.”
A decline in manufacturing in February would mark a fourth consecutive month of year-on-year contractions.
Uncertainty prevails over the extent to which the Middle East war, which has constrained global oil supply since early March and pushed prices up sharply, will affect not just manufacturing but other sectors of South Africa’s economy in coming months.
Last week the government announced a temporary R3 per litre reduction in the fuel levy for April, to lessen the shock of higher petrol and diesel prices for consumers.
Some economists believe the South African Revenue Service’s better-than-expected net collection of R2.01-trillion for the 2025/26 financial year gives the government room to intervene again in May, if necessary, to keep fuel price increases contained.
“A further fuel price hike is not expected for South Africa in May. Furthermore, the R6bn cost to the fiscus for April (R3/l reduction in the general fuel levy) has now been met with news of overcollection in tax revenues for 2025/26 of R3bn,” Investec analyst Annabel Bishop said.
“South Africa’s planned fiscal consolidation will not be interrupted by the remaining R3bn cost, and indeed, the improved investor climate South Africa experienced this year and last is likely to persist after the temporary interruption of the Middle East war.”
But Bishop added: “This is not to say the impact of the war on South Africa’s economy is over, or near to being over, as lagged effects from higher fuel prices will feed through as well as second-round effects, but these are not likely to be very large impacts.”
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