SOUTH African private sector activity rose slightly in May as the coastal province of KwaZulu-Natal started recovering from severe floods, lifting demand and reducing supply chain delays, a survey showed on Friday.
The S&P Global South Africa Purchasing Managers’ Index (PMI) rose to 50.7 in May from 50.3 in April, remaining above the 50-point mark that separates expansion from contraction.
David Owen, an economist at S&P Global Market Intelligence, said the survey pointed to more stable economic conditions, with output and new business recovering slightly after a drop in April.
“Improving conditions in KwaZulu-Natal following the floods allowed vendors to deliver items more quickly,” Owen said.
KwaZulu-Natal is still restoring damaged infrastructure and making plans to re-home people displaced after the April floods, which were among the worst to have affected the province in its recorded history, and killed hundreds of people.
Despite the uptick in the headline PMI number, the survey showed power cuts and inflationary pressures continued to weigh on activity.
“Firms remained under considerable pressure to increase their prices in May, as global inflation drivers such as higher fuel prices continued to lead to higher operating costs,” Owen said. “Some companies indicated that increased charges had resulted in a reduction in client demand, meaning that the overall rise in new business volumes was only marginal.”
– Reuters