05.05.202212:13:00UTC+00South Africa Private Sector Growth At 4-Month Low

South Africa's private sector activity expanded at the weakest pace in four months in April as output and new business fell sharply, hurt by price and supply constraints due to the war in Ukraine and lockdowns in China, and also by floods and load shedding concerns.

The Purchasing Managers' Index, or PMI, dropped to 50.3 in April from 51.4 in March, survey results published by S&P Global showed on Thursday. However, a reading above 50 indicates expansion in the sector.

Output declined at the quickest rate this year so far, due to lower new orders and supply constraints.

Business activity was negatively impacted by load shedding and floods in the KwaZulu-Natal province.

Material shortages were the major concern for South African private sector companies due to the war in Ukraine and Covid-19 lockdown in China.

This led to another sharp lengthening in delivery times in April and input price inflation remained historically high, driven by greater fuel prices, raw material costs including steel. Selling prices also rose for the second straight month.

Companies added workforce numbers only marginally in April and output expectations for the upcoming year improved somewhat as they remained confident that activity will strengthen in line with a post-pandemic recovery.

"With businesses facing the prospect of further load shedding, sharp cost inflation and supply side problems, output growth is expected to be subdued in the near term," S&P Global economist David Owen said.