JOHANNESBURG, July 3 (Reuters) – South Africa’s private sector returned to marginal growth in June as easing price pressures helped offset a second straight monthly decline in output and new orders, a business survey showed on Friday.
The S&P Global South Africa Purchasing Managers’ Index (PMI) rose to 50.5 in June from 49.6 in May, a survey by S&P Global showed.
The 50-mark separates growth from contraction.
“The PMI’s recovery in June was mainly helped by resilient hiring at South African companies, although output and order books fell at slower rates than in May,” said David Owen, Principal Economist at S&P Global Market Intelligence.
He continued: “The outlook among private sector businesses suggests that economic challenges are expected to stay, with optimism hitting its weakest level for nearly five years.”
Output and total new orders both fell for a second month, though each decline softened from May. Firms linked weaker sales to constrained client spending, economic uncertainty and elevated price pressures.
Export business provided some support, with new foreign orders rising slightly after falling in May. Services was the only monitored category to record growth in new work.
Employment continued to expand at a relatively solid pace as firms hired permanent and temporary staff to increase capacity, although the rate of job creation eased slightly. Backlogs were broadly unchanged and remained below 50.0 for a ninth month.
Input price inflation cooled sharply from May’s 46-month high, with the input prices index dropping by nearly seven points. Output price inflation also slowed from a 46-month peak, though firms still reported passing on higher fuel costs.
The survey also showed supplier delivery times lengthened at a slightly faster pace than in May, linked to slower imported goods shipments and vendor capacity constraints. Purchasing activity edged up and input inventories rose for the third time in four months.
“The silver lining from the June data was a marked cooling of inflationary pressures. After reaching the highest levels for nearly four years in May, rates of input price and output charge inflation retreated,” said Owen.
(Reporting by Johannesburg bureau; Editing by Toby Chopra)