South Africa’s business activity improved, with an increase in global and domestic demand for goods and services in July.
This is according to the seasonally adjusted Absa Purchasing Managers’ Index (PMI), which increased by 6.7 points to 52.4 in July, up from 45.7 in June, the Bureau for Economic Research economists noted in the PMI report on Thursday.
“This reflects a solid start to the third quarter following a weak May and June. The survey results show that both domestic and global demand picked up, filtering through to higher activity,” the report noted.
The business activity index increased by 14.5 points to 50.8 in July, supported by new sales orders rising by 17.5 points to 55.4. Both indices returned to expansionary territory for the first time in three months, following poor performance in May and June.
“In these months, significant policy uncertainty remained and hurt demand. The improvements suggest that on-hold orders are now being realised and translated into better activity.”
Export sales increased significantly in July, following four consecutive months of declines. However, supplier deliveries worsened, reflecting a delay in delivery times. This may indicate that suppliers are not coping with handling the increases in demand following months of slower activity.
However, despite the uptick in production, the employment index declined slightly to 45.4 from 46.3 in June.
Meanwhile, the purchasing price index continued to bring good news as it declined for a fourth consecutive month, falling to 63.1 points from 64.5 points in the previous month.
“This was the lowest in seven months and indicative of the continued easing of cost pressures. Petrol prices fell by about R1/litre, with a smaller decline in diesel at the start of July, alleviating pressure on costs,” the economists noted.
Positively, the index tracking expects business conditions in six months’ time to increase to 69.4 points in July from 68.1 in June. This is the most optimistic respondents have been about future business conditions since early 2022.
