The latest Standard Bank Purchasing Managers’ Index (PMI) shows that South Africa’s private sector activity slowed in March, with the index having decreased to 51.1 points, from 51.4 in February.
Nevertheless, the PMI remained above the neutral 50-point level.
The PMI showed that business activity had increased for the second month in succession as client demand strengthened.
Further, new orders rose again in March, although to a lesser extent than that observed in February. Firms, however, reacted to the higher volumes of new business by expanding workforce numbers.
Meanwhile, inflationary pressures continued, driven by higher input costs, with output price inflation quickening at the end of the first quarter.
Standard Bank economist Thanda Sithole noted that the PMI has, for the year-to-date, averaged 50.5, compared with the 50.8 average over the same period in 2017.
“The economy-wide PMI should continue to reflect signs of improving domestic business conditions over the near term. This is premised on the improved political landscape alongside positive interventions at State-owned enterprises to restore good governance, Cabinet renewal in key government positions and, recently, Moody’s decision to preserve South Africa’s investment grade rating and change the rating outlook from negative to stable,” Sithole said.
In addition, the recent 25 basis point interest rate cut by the South African Reserve Bank should provide further impetus to domestic demand.