South Africa private sector returns to growth but Iran war clouds outlook, PMI shows
South Africa's private sector returned to growth in March as faster output and hiring outweighed a slump in export orders and business confidence linked to the US-Israeli war in Iran, a survey showed on Tuesday.
The S&P Global South Africa Purchasing Managers' Index (PMI) rose to 50.8 in March from 50.0 in February. PMI readings above 50.0 indicate growth, while those below denote contraction.
Output grew at the fastest pace in six months, supported by new projects and stock replenishment.
But new orders fell for a second month and export sales posted their sharpest decline in just over two years.
"The latest data showed a bifurcated trend in the South African private sector," said David Owen, senior economist at S&P Global Market Intelligence.
Employment increased at the quickest rate since May 2024 as firms built capacity for new projects.
Business confidence weakened further as concerns over the severity and duration of the Middle East war weighed. Positive sentiment dropped to its lowest level since July 2021, even though around 32% of firms still expected output to rise over the next year.
"The duration of the war will be a key factor determining the extent of the impact on South African companies, including how much a drop in foreign demand and a mark-up in prices filters through to domestic activity," said Owen.
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