South Africa’s PMI Indicates Easing of Business Activity Contraction in February

South Africa’s business activity showed a slower contraction in February as the PMI rose to 49.0 from 47.4 in January. Although business activity remains below the 50.0 growth benchmark, there is optimism for recovery due to improved demand in some sectors. Concerns about external trade policies persist.

In February, South Africa’s business activity showed signs of easing contraction, according to a recent survey. The S&P Global South Africa Purchasing Managers’ Index (PMI) improved to 49.0 from 47.4 in January, remaining below the neutral threshold of 50.0 for the third month. This indicates a slower pace of decline in output, new orders, employment, and inventories compared to earlier in the year.

David Owen, a senior economist at S&P Global Market Intelligence, highlighted that the February data indicated a “partial recovery in economic momentum in South Africa.” This uptick seems largely attributed to a moderated decline in business activity as certain firms reported better demand and a return to project work.

Despite new orders declining for the third consecutive month, the most significant drops were observed in the wholesale and retail sectors. Export sales also fell, but at a decreased rate, largely due to diminished political unrest in Mozambique.

Business sentiment remains cautiously optimistic regarding future output, although concerns persist about potential adverse effects from U.S. trade policies. The PMI survey results suggest that while the health of the private sector has weakened, the deterioration is less severe than in January, hinting that a recovery may be anticipated soon.

In summary, South Africa’s PMI indicated a slowing contraction in business activity for February, suggesting improved economic momentum. While new orders continued to decline, certain sectors reported a slight uptick in demand. Firms remain hopeful for future output despite external trade concerns. Therefore, there is a cautious optimism about the private sector’s recovery moving forward.

Original Source: money.usnews.com