S. Africa PMI dips below 50 in Dec ’24

South Africa’s Purchasing Managers’ Index (PMI) slipped to 49.9 in December 2024, down from 50.9 in November, marking the first contraction in private sector activity in four months.
Despite the December downturn, the fourth-quarter PMI average of 50.5 was the highest since the third quarter of 2022, suggesting potential GDP growth recovery after the previous quarter’s contraction.

The December reading reflected a fractional drop in business conditions, as subdued market demand hindered new orders, including export sales. This ended a four-month growth streak—the longest observed in over two years.

In response, businesses marginally reduced output for the first time since August, while employment levels remained largely stable after a brief rise in November.

Sectoral data revealed widespread weakness, with construction experiencing the sharpest declines in output and sales. However, services showed a slight uptick in new work, offering a glimmer of positivity.

Supply chains also improved slightly, with delivery delays easing to their lowest level since April, encouraging firms to increase input purchases for the third consecutive month.

Inflationary pressures intensified, with input costs rising at the fastest pace in four months, driven by higher wages and material prices.

Firms passed on these costs to customers, leading to a solid increase in output charges, although the rate of inflation remained below long-term averages.

Business confidence about 2025 remained positive, with a third of firms expecting growth, but optimism softened for the third time in four months due to uncertainty over future sales.

Attribution: Amwal Al Ghad English

Subediting: Y.Yasser