S&P Global South Africa Purchasing Managers’ Index rose to 50.5 in June
The S&P Global Purchasing Managers Index, rose to 50.5 in June. This puts the Index in a state of expansion, recovering from contractionary territory. Business confidence, however, is at its lowest level in nearly five years. Joining CNBC Africa for more insight; is Ronel Oberholzer, Head of Sub-Saharan Africa Economics at S&P Global Market Intelligence.
Fri, 03 Jul 2026 15:29:02 GMT
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Key Points:
- South Africa’s S&P Global PMI rose to 50.5 in June, moving back into expansionary territory.
- The reading signals only marginal growth, as it sits just above the 50 threshold.
- Easing input cost inflation and resilient employment helped support the June improvement.
- Underlying weakness remains evident in softer new orders and output.
- Consumers continue to face pressure from high living costs, elevated interest rates and fuel-related costs.
- Administered price increases, including electricity and municipal tariffs in July, may keep inflation elevated.
- S&P Global Market Intelligence still sees a possible interest rate increase in July before a potential hold.
- The services sector was a standout performer, supported by South Africa’s services-heavy economy and AI-related investment.
- Employment resilience reflects firms holding on to workers rather than actively expanding hiring.
- Business confidence fell to its lowest level in nearly five years amid uncertainty over potential domestic unrest and broader global risks.
Topics
South Africa PMIS&P GlobalSouth Africa economyPurchasing Managers Indexbusiness confidenceinflationinterest ratesservices sectoremploymentoil prices
South Africa’s private sector edged back into growth in June, with the S&P Global South Africa Purchasing Managers’ Index rising to 50.5 from contractionary territory, signaling a modest expansion in business activity. While the headline reading offers a measure of relief for the economy, underlying details in the survey and commentary from S&P Global Market Intelligence suggest the recovery remains fragile
A PMI reading above 50 indicates expansion, while a figure below that threshold points to contraction. June’s print, though positive, was only marginally above neutral, underscoring that the rebound is still tentative rather than broad-based
Speaking in a television interview, Ronal Oberholzer, head of Sub-Saharan Africa Economics at S&P Global Market Intelligence, described the latest reading as encouraging but cautioned against reading too much into a narrow move above 50
“Although we are only just there, it is at 50.5, which is only just above the 50 index level,” Oberholzer said, noting that the result points to only a slight expansion in activity
According to Oberholzer, part of the improvement came from easing input cost pressures and a labor market that has held up better than expected. Businesses also appeared to benefit from some stabilization in oil prices after recent volatility, which could help contain fuel-related cost pressures in South Africa
Still, the inflation backdrop remains mixed. Oberholzer said the recent inflation print came in slightly higher, and while the direction of some components may be improving, other cost drivers are becoming more problematic. In particular, he flagged administered prices — including electricity and municipal tariff increases due in July — as a growing
That means businesses and households may continue to face a difficult operating environment even if global energy prices remain relatively contained. The outlook for monetary policy is therefore far from settled. While some market participants have begun discussing the possibility of interest rate cuts before year-end, Oberholzer suggested that inflation risks could still force policymakers to keep a tightening bias, with S&P Global Market Intelligence expecting a possible increase in July before rates potentially move to a holding pattern.
Beneath the headline PMI improvement, the report revealed signs of softness in new orders and output, indicating that demand conditions remain under pressure. Oberholzer said consumers are still struggling with high living costs, elevated interest rates and the aftereffects of fuel price increases. He also noted that temporary fuel levy relief previously provided by the government is set to fall away fully in July, adding another layer of pressure to household budgets
That squeeze on consumers is feeding directly into weaker demand for businesses. Declining new orders, he said, reflect a private sector that is not yet seeing a convincing turnaround in customer spending
External risks are also lingering. Although tensions in the Middle East have eased somewhat and oil prices have retreated from earlier spikes, uncertainty in the global economy remains high. Oberholzer said persistent geopolitical uncertainty tends to weigh on investor sentiment, discouraging companies from making new investment commitments and pushing capital toward safer assets
In addition, he warned that supply-side risks have not disappeared. Fertilizer prices may take time to stabilize, and weather-related shocks could become increasingly important for inflation. Oberholzer pointed to the potential impact of a Super El Niño-driven drought across Africa, which could place upward pressure on food prices. Given food’s significant weighting in the consumer price basket, that poses an additional threat to the inflation outlook
One bright spot in June was the services sector, which stood out as aouth Africa’s economy, is benefiting from continued consumer spending in that category as well as investment in AI-related activity. That dynamic reflects the country’s increasingly services-oriented economic structure, even as goods-related demand remains softer
Employment was another relative area of resilience, though Oberholzer cautioned that this should not be interpreted as strong hiring momentum. Instead, he said firms have largely refrained from cutting jobs, in part because they viewed some recent uncertainty — especially linked to Middle East tensions — as temporary. By holding on to workers rather than reducing headcount, companies may be positioning themselves to ramp up output more quickly if conditions improve
Perhaps the most troubling element of the June survey was the slump in business confidence, which fell to its lowest level in nearly five years. Oberholzer linked that weakness largely to fears surrounding possible domestic disruptions, including concerns over marches and unrest. While the feared escalation did not materialize in a way that significantly affected ports, transport or broader economic functioning, the uncertainty appears to have weighed heavily on sentiment during the month
Looking ahead, the picture for South Africa’s private sector remains finely balanced. The return to expansion is a welcome development after earlier weakness and suggests that some firms are beginning to regain footing. At the same time, weak demand, rising administered prices, inflation uncertainty and depressed business confidence all point to an economy that is far from a durable recovery
Oberholzer characterized the outlook as a “mixed picture,” but said there are reasons for cautious optimism. A more stable Middle East environment, PMI readings above 50, and the possibility that interest rates may stop rising after July could all help improve business and consumer sentiment in the months ahead
For now, however, South Africa’s June PMI tells a story less of a full-blown rebound than of a private sector managing to stay just above water in a highly uncertain environment
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