SA private sector PMI shows growth as inflation cools
JOHANNESBURG — South Africa’s private sector returned to marginal growth in June according to the S&P Global Purchasing Managers’ Index (PMI). The PMI rose to 50.5 (any value above 50 indicates expansion) from 49.6 in May. Economists noted easing input cost inflation was a key factor: input prices had hit a 46-month high in May but fell sharply in June. Firms reported continued employment growth and recovering new orders, suggesting resilience amid economic headwinds.
Analysis: PMI growth and what it means
1) Inflation easing. June’s data showed a marked cooldown in inflation pressures. The input-price index “dropped nearly seven points,” according to S&P analyst David Owen. This relieves some pressure on households and firms, aligning with SARB’s view that inflation has peaked. If sustained, this may allow interest rates to remain steady.
2) Growth outlook. While overall demand remains weak (domestic consumption sluggish), exporters saw slight gains. June’s PMI reflects cautious optimism; employment is still expanding (though at a slightly slower pace). Many businesses noted improved stock availability and faster supplier deliveries, hinting at stabilizing supply chains after recent disruptions.
3) Sector divergence. The survey showed services leading growth, while manufacturing output still contracted. Analysts warn that second half of 2026 will depend on consumer spending (hurt by high debt) and global conditions (e.g. China demand for commodities). Government stimulus in infrastructure might soon provide a lift.
What’s next
The SARB will consider these PMI readings in its September meeting. If data continues to show easing inflation and modest growth, the central bank may pause rate hikes. Investors will watch upcoming GDP figures (due Oct) and PMI for July to confirm trends. Firms with renewed confidence may delay layoffs, while policymakers face pressure to reignite growth through reforms.
