South African business activity contracts in March - PMI

Source: Reuters.

The S&P Global South Africa Purchasing Managers' Index (PMI) fell to 49.7 in March from 50.5 in February, dropping below the 50 mark dividing growth from contraction.

"Output returned to contraction after stabilising in the previous month, as firms highlighted that ongoing load shedding (power cuts) had curtailed activity," said David Owen, senior economist at S&P Global Market Intelligence.

State power utility Eskom is implementing the biggest rolling power cuts on record, leaving households and businesses in the dark for up to 10 hours a day.

Owen said recent price data suggest that the country could face another wave of inflation, with business costs rising at the fastest rate since July 2022.

"Exchange rate weakness, higher fuel costs and weak supply chain conditions led to a steep rise in purchase prices," he said.

However, a number of companies reported that sales are now picking up and providing some optimism, with confidence levels rising for the first time in six months, Owen added.