Johannersburg— South Africa's private sector slipped deeper into contraction in September, with business activity weakening at its fastest pace since December as falling new orders, supply disruptions and higher fuel costs weighed on companies.

The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 49.0 in September, from 50.5 in August. A reading below 50 signals contraction, while a reading above 50 indicates expansion.

The latest decline reflected renewed weakness in business activity, new orders and stocks of purchases, according to S&P Global.

David Owen, Principal Economist at S&P Global Market Intelligence, said businesses were facing weaker demand as rising prices and greater economic uncertainty encouraged customers to delay spending.

New Orders Suffer Sharpest Decline In Two And A Half Years

New orders recorded their steepest decline in two-and-a-half years, as businesses reported that customers were becoming more cautious because of uncertainty surrounding fuel prices and both domestic and global economic conditions.

Export demand, however, provided some relief. New export business increased for a fourth consecutive month, highlighting stronger external demand even as the domestic market weakened.

Supply Pressures Intensify

South African businesses also faced worsening supply-chain conditions during the month.

Supplier delivery times lengthened at the fastest pace since February 2024, with companies citing congestion at the Port of Durban, shipping disruptions and shortages of materials.

The disruptions added to pressure on companies already dealing with elevated operating costs.

Fuel prices push up business costs

Input-cost inflation remained elevated, largely because of higher fuel prices. Purchase-price inflation also accelerated to a three-month high.

Businesses responded by raising selling prices at the fastest rate since June, suggesting that some of the higher costs were being passed on to customers.

Employment was broadly stable, although companies recorded a slight reduction in their workforces during the month.

Business confidence improves

Despite the weaker current conditions, business expectations improved for a third consecutive month, reaching their highest level since May.

Companies expressed hope that easing supply-chain disruptions and lower fuel prices could help support stronger output over the next year.

Source:Reuters

Reloporting:Johannesburg Bureau

Editing:Toby Chopra

Why it matters

South Africa's September PMI highlights the pressure facing businesses as weak domestic demand combines with rising operating costs and supply-chain disruptions.

The sharp fall in new orders is particularly important because sustained weakness in domestic demand could limit economic growth and discourage businesses from expanding or hiring.

At the same time, improving business expectations and stronger export orders provide some positive signals. If fuel costs ease and logistical bottlenecks improve, companies could regain momentum in the months ahead.

For investors and policymakers, the balance between weak domestic demand, inflationary cost pressures and improving business confidence will be important in assessing South Africa's economic trajectory.