JOHANNESBURG, August 5 (Reuters) -South Africa’s private sector expanded slightly in July marking the third consecutive month of growth helped by renewed sales growth and sustained employment increases, a survey showed on Tuesday.
The S&P Global South Africa Purchasing Managers’ Index (PMI) rose to 50.3 in July from 50.1 in June, S&P Global reported. Readings above 50 indicate growth in business activity, while below that signals contraction.
New orders and employment were the primary contributors to the headline figure, as new business volumes increased following a dip in June.
Domestic sales improved, particularly in services and wholesale & retail sectors, while new export business continued to decline for the fourth consecutive month.
Employment growth continued for the second month in a row. The rate of expansion was the fastest since May 2024, supported by both permanent and temporary hires. This hiring helped reduce backlogs, with the quickest decrease in outstanding business since February.
However, cost pressures intensified, with input prices rising sharply, driven by a significant increase in staff costs. Wage inflation accelerated for the third consecutive month, and purchase costs rose due to higher fuel prices and supplier charges. Despite these pressures, firms passed on some cost burdens to clients, resulting in a modest rise in output prices.
The outlook for future business activity improved to a six-month high, with 41% of firms projecting increased output over the next 12 months. However, optimism remained below the trend seen last year, as concerns about global trade policy and exchange rate movements persisted.
South Africa faces a 30% tariff on its exports to the U.S. from this week, a move expected to cost tens of thousands of jobs, after the country failed to secure a trade deal before a deadline set by U.S. President Donald Trump.
The country said on Friday it would draft measures to support exporters hit by tariffs.
(Reporting by Johannesburg bureau; Editing by Hugh Lawson)
