According to a survey released on Monday, private sector economic activity in South Africa fell for the third consecutive month in May due to the ongoing effects of power outages and inflationary pressures.
The S&P Global South Africa Purchasing Managers’ Index (PMI) fell to 47.9 in May from 49.6 in April, the lowest reading since July 2021. Activity levels above 50 indicate growth.
According to David Owen, economist at S&P Global Market Intelligence, customer demand was back in negative territory in May after a promising (albeit slight) uptick in April, who also noted a sharp and accelerated drop in output.
He also stated that businesses were still dealing with high inflation as a result of factors such as rand depreciation, rising energy prices, and wage pressures.
South Africa’s state-owned power utility, Eskom, has also warned that it may have to implement record-high power cuts this winter as the country faces its worst power crisis in its history.
Because “the energy outlook for the winter is bleak,” Owen predicts that more businesses will seek alternative electricity sources, raising consumer costs even further.
Despite this, businesses remained upbeat, noting that supply chain issues were improving.
