South African businesses improved in March despite disruptions caused by the Middle East war.
S&P Global South Africa Purchasing Managers' Index (PMI) It increased from 50.0 in February to 50.8 in March. This was the first improvement in business conditions in the last six months.
Four of the five sub-components had a positive impact on the direction of the PMI, although one of these, suppliers' delivery time, was due to increased constraints on shipping.
BER Manufacturing PMI It increased from 47.7 in February to 49.0 in March. Readings above 50.0 indicate an improvement in business conditions over the past month, while readings below 50.0 indicate a deterioration.
march component
South African businesses improved in March due to a variety of factors. Employment increased as a result of improvements in South African businesses. Businesses also built up inventory during March. Total reserves rose for the first time in four months and at the fastest rate since May 2025.
However, the war in the Middle East contributed to supply chain tensions. The resulting uncertainty created hesitation among customers. As a result, this affected new orders.
Input price inflation has accelerated due to rising fuel prices, a weaker rand due to a stronger US dollar and changes in the minimum wage. In response, output duties were eliminated to the largest extent in just over a year.
Where production had increased, companies reported starting new projects and renewing stock-building efforts. The initiation of new projects was also a factor behind the increase in staffing capacity. Surprisingly, the rate of job creation was seen to be the strongest since May 2024.
negative impact of war
While the March survey data indicated a strong improvement in general private sector business conditions, there were some signs that increased economic uncertainty and disruption to international supply chains due to the war in the Middle East had disrupted South African companies.
S&P Global said the first sign was a moderate but sharp decline in new orders. This was driven by a decline in export sales that was most pronounced in just two years. This may be due to hesitation among foreign customers. Additionally, according to the panel members, unstable exchange rates resulted in loss of orders. Increase in fuel prices may weaken demand.
Total delivery times increased in March, with the rate of increase reaching a 16-month high. Firms noted widespread disruptions to ocean freight movement across the Strait of Hormuz and related supply disruptions.
Input delays contributed to the slowest reduction in the work backlog for six months. Input price inflation rose sharply in March due to the fastest rise in procurement prices since August 2024.
David Owen, senior economist at S&P Global Market Intelligence, said: “Going forward, the duration of the war will be a key factor determining the extent of the impact on South African companies, including how much of the decline in foreign demand and price increases are offset through domestic activity.”