South Africa’s private sector business conditions contracted sharply in September, as falling new orders, severe port bottlenecks, and accelerating fuel-driven cost pressures squeezed private sector commercial activity nationwide.
According to survey data released Monday by S&P Global, the flagship South Africa Purchasing Managers’ Index fell to 49.0 in September from 50.5 in August, crossing below the 50.0 neutral threshold.
The index reading indicates the fastest downturn in private sector activity since December, reversing brief expansion gains recorded during the previous month as business momentum stalled abruptly.
New order inflows posted their steepest decline in two-and-a-half years. Survey respondents attributed the sharp reduction in demand to deteriorating domestic market confidence and heightened price sensitivity among commercial buyers.
Logistics disruptions severely hindered business operations as supplier delivery times lengthened at the fastest pace since February 2024, driven by persistent freight congestion at the Port of Durban and raw material shortages.
Operating expenses accelerated as rising fuel prices pushed purchase price inflation to a three-month high. To protect operating margins, companies increased selling prices at the fastest rate seen since June.
The private sector decline follows official statistics showing South Africa’s economy contracted 0.2% in the second quarter, highlighting underlying fragility across the broader macroeconomic landscape.
Compounding pressure on businesses, the South African Reserve Bank raised its benchmark interest rate by 25 basis points to 7.25% in late September to combat intensifying upside inflation risks driven by energy costs.
Despite immediate operational constraints and flat employment levels, long-term business sentiment rose to its highest level since May, as firms anticipate gradual supply chain relief over the next twelve months.
