South African Business Activity Contracts in December 2024

Despite a slowdown in business activity at the end of 2024, economists maintain optimism for improvement in the coming months.

Business activity in South Africa slowed down at the end of 2024 according to both the Absa PMI and the S&P Global PMI . However, economists remain optimistic about an improvement in business conditions in the future. The fourth-quarter PMI was the best in two years. The Absa Purchasing Managers’ Index ( PMI ) is an economic activity index based on a survey conducted by the Bureau for Economic Research (BER) and sponsored by Absa.

S&P Global compiles the S&P Global South Africa PMI from around 400 private sector purchasing managers' responses. The seasonally adjusted Absa PMI declined by 1.9 points to 46.2 points in December 2024, remaining in contractionary territory. This puts the average PMI for the fourth quarter at 49 points, not significantly different from the November figure. The business activity index decreased by 8.7 points to 40.3 in December, and the BER says the pullback in production came on the back of a sharp fall in demand. The new sales orders index fell to 37.4 points from 45.9 in November. Worryingly, the BER says, some respondents noted that conditions in December 2024 were worse than usually seen in December. Export sales also dropped sharply and fell back to levels last seen in the first half of 2024. The supplier deliveries index increased by 7.7 points to 56 points, moving above 50 points for the first time in three months. The BER says with production and orders significantly weaker, higher demand for supplies is unlikely to be the cause of the delays (this index increases when deliveries are slower as this is normally seen as a positive sign with manufacturers competing for supplies). Logistical issues remain locally and in the global markets, which likely caused the slowdown in delivery times. The employment index decreased by 0.4 points to 46.5 and remained in contractionary territory for the ninth consecutive month

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SOUTH AFRICA BUSINESS ACTIVITY PMI CONTRACTION ECONOMY

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