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Business Activity Falls In June Due To Post-Election Delays, PMI Shows

8 July 2024 – South African private sector activity fell in June as output and new orders slipped on uncertainty over the outcome of the May election, a survey showed.

The S&P Global South Africa Purchasing Managers’ Index fell to 49.2 in June from 50.4 in May. A reading below 50 indicates contraction.

South Africans voted in the national elections on May 29, which saw the ANC lose its parliamentary majority for the first time since the end of apartheid 30 years ago, creating some uncertainty in financial markets.

The ANC opted for a government of national unity with 10 other political parties, and markets spent much of June awaiting the composition of President Cyril Ramaphosa’s new Cabinet.

“The PMI’s print of 49.2 linked to sharper falls in output and new orders was largely due to a temporary pause in customer spending as businesses awaited the outcome of the elections,” said David Owen, senior economist at S&P Global Market Intelligence.

Business conditions deteriorated on the quickest fall in output in three months and a drop in new order volumes for the 14th month in a row.

“We may see a slight recovery in sales in July as firms return to normal activity,” Owen said. Source: Business Report (IoL)