South African private sector activity grew for the first time in six months in August as improved demand led to firms boosting output, a survey showed yesterday.
The S&P Global South Africa Purchasing Managers' Index (PMI) rose to 51.0 in August from 48.2 in July. A reading above 50 shows growth.
Overall business costs rose at the slowest rate since January, leading to a slower increase in firms' output charges, the survey showed.
“The August South Africa PMI pointed to an encouraging turnaround in the private sector economy... as companies reported an increase in output... and demand conditions were broadly steady,” said David Owen, economist at S&P Global Market Intelligence.
However, Owen warned that domestic factors such as rolling power cuts by state power utility Eskom, the weakness in the local rand currency, and supply disruptions continued to be hindering factors for growth.
“August's upturn does little to turn the tide after a dismal performance in 2023 so far. Progress on these issues would certainly prove beneficial to South African companies in the latter part of this year,” he said.
Meanwhile, global business activity largely slowed further last month as services firms struggled in the face of weak demand as rising prices and borrowing costs made indebted consumer rein in spending, a raft of surveys showed yesterday.
In the euro zone, the picture was gloomier than initially thought as the bloc's dominant services industry fell into contractionary territory, suggesting the bloc could slide into recession.
Germany’s services sector contracted for the first time this year and France’s shrank more than first estimated. In Britain, outside the European Union, its survey showed the sharpest business slowdown in seven months.
Asia’s surveys for August were also more downbeat with China’s services activity expanding at the slowest pace in eight months as weak demand continued to dog the world’s second-largest economy while in India growth lost some steam.