Business Activity Declines in June Due to Post-Election Delays, PMI Reports
South African private sector activity declined in June as output and new orders decreased amid uncertainty following the May elections, according to a survey released on Wednesday.
The S&P Global South Africa Purchasing Managers' Index (PMI) fell to 49.2 in June from 50.4 in May. A reading below 50 signals contraction.
The national elections held on May 29 resulted in the ANC losing its parliamentary majority for the first time since the end of apartheid 30 years ago, causing uncertainty in financial markets.
Following the elections, the ANC formed a government of national unity with 10 other political parties, leaving markets in suspense over the composition of President Cyril Ramaphosa's new Cabinet.
David Owen, senior economist at S&P Global Market Intelligence, explained that the PMI reading of 49.2, reflecting significant declines in output and new orders, was primarily due to a temporary slowdown in customer spending as businesses awaited the election results. Business conditions worsened due to the sharpest drop in output in three months and a 14th consecutive month of declining new order volumes.
Owen noted, "We may see a slight rebound in sales in July as firms resume normal activity."
The S&P Global South Africa Purchasing Managers' Index (PMI) fell to 49.2 in June from 50.4 in May. A reading below 50 signals contraction.
The national elections held on May 29 resulted in the ANC losing its parliamentary majority for the first time since the end of apartheid 30 years ago, causing uncertainty in financial markets.
Following the elections, the ANC formed a government of national unity with 10 other political parties, leaving markets in suspense over the composition of President Cyril Ramaphosa's new Cabinet.
David Owen, senior economist at S&P Global Market Intelligence, explained that the PMI reading of 49.2, reflecting significant declines in output and new orders, was primarily due to a temporary slowdown in customer spending as businesses awaited the election results. Business conditions worsened due to the sharpest drop in output in three months and a 14th consecutive month of declining new order volumes.
Owen noted, "We may see a slight rebound in sales in July as firms resume normal activity."
