South Africa's private sector economy showed positive signs in May, S&P Global South Africa Purchasing Managers' Index (PMI) data released on Wednesday shows. New orders nearly stabilised and growing confidence in future demand led to the fastest stock increase in nine years. Job growth accelerated and delivery delays remained low. However, the election led to reduced business activity and paused client spending decisions. The PMI rose slightly from 50.3 in April to 50.4 in May, marking the second consecutive month above the neutral mark of 50. This is the first back-to-back improvement since late 2022. Although new work intake continued to decline, it slowed to a three-month low. Lower sales were attributed to election-related spending delays, affecting output modestly. However, some companies saw an increase in customer orders, including new business from abroad for the first time in ten months. Supply chains improved slightly, with modest delays at the port of Durban. Firms, optimistic about future activity, increased input stocks in preparation for expansion, marking the sharpest growth since March 2015. Sentiment for the one-year outlook strengthened, with 47 per cent of respondents predicting output growth. Job creation continued for the fourth consecutive month, with the sharpest growth since September 2022. Despite increased workforce capacity, outstanding business levels rose due to material shortages. Input costs sharply increased, driven by supplier charges, commodity prices, and transport costs, while wages rose strongly. Overall selling prices also increased sharply, reflecting efforts to maintain margins amid rising costs.
