By: ThinkBusiness Africa
South Africa’s private sector successfully navigated out of a late-2025 slump to reach a point of stability in January, according to the latest S&P Global Purchasing Managers’ Index (PMI) released Wednesday.
After a turbulent fourth quarter, the headline PMI climbed to 50.0 in January—up from a weak 47.7 in December. The 50.0 mark represents the neutral threshold between contraction and growth, signaling that the economy has stopped shrinking and is beginning to level out.
This shift indicates that the sharp contraction seen at the end of 2025 has leveled off, with both business output and new order volumes steadying. While the services sector remained somewhat quiet and total exports continued to struggle, companies reported a slight uptick in domestic new business, signaling a fragile but welcome return of demand.
Operational data from the survey suggests businesses are preparing for a more active year, as input buying surged at its fastest rate in four months. However, this increased activity contributed to supply chain disruptions, causing supplier delivery times to lengthen for the first time in nearly a year.
Despite these logistical hiccups, the financial environment for businesses improved as overall input price inflation dropped to a three-month low. This cooling of price pressures was largely supported by a stronger Rand, which has gained more than 3% against the US Dollar since the start of the year, helping to offset rising salary costs and limiting the need for aggressive hikes in selling prices.
New business volumes and total output remained largely unchanged in January, a major improvement over the “sharp drop” witnessed in December. While the services sector remains somewhat sluggish and exports saw a slight decline, domestic demand showed early signs of a “minor uptick,” according to survey respondents.
Business owners received a reprieve as inflationary pressures eased to their lowest level in three months. A stronger Rand—which has gained over 3% against the US Dollar since the start of the year—helped dampen the cost of imported goods, effectively offsetting a rise in salary costs. This led to the softest increase in selling prices since last October.
The South African Reserve Bank (SARB) recently kept the repurchase rate at 6.75%, noting that while inflation is stabilizing near their 3% target, they remain cautious of global “jitters.”
However, business optimism remains high, with nearly half of all firms surveyed predicting an increase in activity over the next 12 months, citing new projects and improved energy reliability as key drivers.
