FX.co ★ South African Private Sector Logs Marginal Expansion

In April, there was a slight expansion in South Africa's private sector activity, as shown by recent data from S&P Global. This was due to a minimal drop in output and new orders.

The purchasing managers' index, a measure of economic health, rose to 50.3 in April from 48.4 in March. Readings below 50.0 suggest contraction within the sector, whereas readings above 50 signal expansion.

Even though demand was low and economic activity diminished, some companies managed to boost their output. This was largely thanks to a decline in power cuts and a slower decrease in new orders.

New orders only fell slightly in April, a much smaller decrease compared to March. Export demand also dropped a bit, particularly in various African markets and European economies, including the UK.

South African companies were prompted to expand their workforce and purchasing activities. This was driven by signs of increasing demand and hopeful predictions for the upcoming months.

In terms of costs, there were significant pressures in April due to higher energy and fuel prices and a weakening currency. Despite this, inflation rates slightly decreased, whereas selling price inflation accelerated, reaching its highest point since October of the previous year.