Business activity drops again in July

Business activity contracted for the fifth consecutive month in July as rising prices and weak business confidence weighed on demand, a survey showed on Thursday.

The S&P Global South Africa Purchasing Managers’ Index (PMI) dropped to 48.2 in July from 48.7 in June. A reading below 50 shows contraction.

Rising fuel prices and a weak currency continued to drive input costs higher, while the rate of inflation quickening slightly meant South African firms passed costs on to customers, the survey showed.

A further sharp increase in selling prices signals that customers could face additional pain…

“At 48.2, the index was also at its second lowest in exactly two years, suggesting that the private sector remains stuck in a downturn that may prove difficult to escape,” said David Owen, economist at S&P Global Market Intelligence.

“A further sharp increase in selling prices signals that customers could face additional pain at a time of already weakened finances, adding even greater gloom to the demand outlook,” Owen added.

Ongoing rotational power cuts implemented by state-owned power utility Eskom continued to affect business conditions as firms reported a lack of orders from clients due to the outages, according to the survey. — Bhargav Acharya, (c) 2023 Reuters