South African businesses reported a second successive monthly fall in activity in October, as weak demand, rising fuel costs and shipping delays continued to weigh on the private sector, according to S&P Global’s October purchasing managers’ index.
The index recorded 49 for the second consecutive month, its joint-lowest so far in 2026, with four of the five subcomponents making negative contributions, including faster downturns in output and staffing levels.
Readings above 50 signal an improvement in business conditions compared with the previous month, while readings below 50 indicate a deterioration.
Firms cut jobs at the sharpest rate in six years, while business confidence sank to a level last seen in mid-2020, S&P Global said. Higher fuel prices drove a quicker rise in purchase costs, and companies also attributed a dip in business activity to weak customer demand as well as port and shipping disruptions.
Aside from the softer business activity, new orders also decreased, with companies surveyed frequently citing weak client purchasing power, compounded by fuel costs linked to the Middle East conflict and broader economic uncertainty. Purchase price inflation quickened to the highest since June, while wage costs rose slightly faster than in September.
Businesses often passed higher costs on to customers, leading to a solid increase in output charges that was the quickest in four months. Construction firms bucked the trend, however, cutting prices for the first time in a year.
Read: Manufacturing conditions slightly better in October but demand still subdued
“Perhaps the most concerning signal from the latest survey was a sharp drop in business confidence,” said S&P Global Market Intelligence principal economist David Owen.
“Expectations for activity over the next 12 months fell to their lowest since August 2020, with firms suggesting the current economic and geopolitical environment had led to a reassessment of long-term risk.
“At the same time, businesses cut staff numbers at the fastest rate in six years. With backlogs declining and confidence at a multiyear low, it appears that job-shedding may continue into the final months of the year unless demand conditions improve noticeably.”
Business expectations for the coming year deteriorated markedly in October, sinking to the lowest since August 2020. Though firms still anticipated growth on average, supported by positive new business projections, sentiment softened in all sectors, with construction firms forecasting a fall in output for the first time in a year.
The report pointed to a drop in employment for the third successive month in October, with the rate of job-shedding the sharpest in six years. Firms cited redundancies, dismissals and voluntary leavers, but weaker demand meant that backlogs of work decreased marginally.
Supply chain pressures persisted, though suppliers’ delivery times lengthened at a softer pace than in September, when delays were the most severe for 31 months. Companies again cited logjams at the Port of Durban, alongside global shipping delays, raw material shortages and reduced transport capacity. Industrial firms faced the most severe delays.
Earlier this week, a parallel survey of manufacturing purchasing managers sponsored by Absa and compiled by the Bureau for Economic Research showed that conditions for the sector improved slightly in October as production and new sales orders clawed back further ground from August lows, though underlying demand remained subdued.
Business Day
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