SA’s private sector ended the first quarter of 2025 on weaker footing with business conditions deteriorating for a fourth consecutive month, according to the latest S&P Global SA purchasing managers index (PMI).
This comes as output and sales declined, with businesses highlighting further weakness in demand amid uncertainty in the economic outlook leading to sustained cuts in staffing and purchases, the ratings agency stated in its report.
The PMI declined to 48.3 in March from 49.0 in February, marking its second-lowest level since July 2023 and remaining below the neutral 50 mark that separates growth from contraction.
The data confirms a full quarter of private-sector decline following readings of 47.4 in January and 49.0 in February.
The PMI is a closely watched indicator of private sector health and a reliable early signal of changes in economic growth, making it a key tool for businesses, investors and policymakers.
“The March PMI figures confirmed a full quarter of declining business conditions in the SA private sector, which suggests that growth is likely to weaken from its strong pace of 0.8% quarter on quarter in the fourth quarter of 2024,” S&P Global Market Intelligence senior economist David Owen said.
The latest drop was primarily driven by a continued fall in new order volumes, which survey respondents linked to economic and political uncertainty. This was the second-fastest decline in new business in a year and a worsening from February, when businesses had reported some stabilisation in demand conditions.
While domestic demand remained under strain, March brought a notable improvement in export orders, which rose for the first time in seven months. Businesses cited stronger trade from African markets, which helped offset weaker orders from the US and Europe.
The decline in new work translated into a further contraction in private-sector activity. The rate of contraction accelerated slightly from February and was described as “robust” by S&P Global.
In response, businesses cut back on purchases and inventories, anticipating continued sluggish sales.
According to Owen, some panellists blamed the lower demand on the uncertain outlook on domestic fiscal policy and global trade, “which has contributed to a waning of business confidence and a drop in customer spending.”
March also marked the third straight month of job losses, though as in February, the pace of retrenchments was mild. Some companies noted that job cuts were beginning to affect available capacity, contributing to a slower decline in backlogs of work.
One of the few encouraging signs in the March data was a softening in cost pressures. Input prices rose at the slowest pace in five months with only 9% of surveyed firms reporting cost increases since February.
An improved exchange rate against the dollar helped offset higher material prices while businesses in the services sector reported a month-on-month drop in total input costs.
This helped alleviate pressure on selling prices, with March marking the first decline in output charges since October 2024.
“Not only was the latest increase in input costs the slowest for five months, it was also one of the softest recorded since the survey began in 2011. This helped firms to cut their charges, which could return some confidence to clients,” Owen said.
However, the drop in selling prices was marginal, suggesting businesses were cautiously adjusting prices in response to weak demand.
Supplier delivery times improved further in March, with the smallest lengthening in 20 months, as logistical constraints — particularly at domestic ports — eased.
Business expectations for the year ahead dipped slightly in March, falling back in line with the long-run average after staying above it for most of the past three years.
Nonetheless, more firms still anticipate growth than contraction, citing hopes for stronger demand, lower inflation and increased investment in the coming months.
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