South African private sector facing economic crisis with third straight month of contraction

Economic activity in the South African private sector contracted for a third consecutive month in May.

1. The contraction was due to rolling power cuts and inflationary pressures.
2. The Purchasing Managers’ Index (PMI) fell to 48.4 in May, the lowest level in almost two years.
3. The PMI is a measure of the health of the private sector, with a score below 50 indicating a contraction.
4. The decline in economic activity was broad-based, with all sectors except for agriculture reporting lower activity.
5. New orders, employment, and input purchasing all declined in May, while output and exports increased slightly.
6. The survey suggests that South Africa’s economic recovery remains fragile and that sustained policy reforms are needed to boost business confidence and support growth.