South Africa’s private sector moved back into growth territory in March, according to the S&P Global Purchasing Managers' Index (PMI), with the headline reading rising to 50.8 from 50.0 in February. Readings above 50.0 indicate expansion, and the latest figure reflects a modest pick-up in activity after a stagnant month.
Output expanded at the fastest pace in six months, supported in part by new projects and a phase of stock replenishment, the survey showed. Firms also increased payrolls, with employment growth accelerating to its strongest pace since May 2024 as companies built capacity for the workload associated with new projects.
Despite those positive signals, the underlying picture was mixed. New orders declined for a second month, and export sales experienced their steepest fall in just over two years. The divergent trends left the private sector split between domestic activity strengthening and external demand softening.
"The latest data showed a bifurcated trend in the South African private sector," said David Owen, senior economist at S&P Global Market Intelligence.
Business sentiment weakened further in March as firms factored in risks from the U.S.-Israeli war in Iran. Positive sentiment fell to its lowest level since July 2021, even though roughly 32% of companies still expected output to increase over the coming year.
Owen noted that the length of the conflict will be important for how much its effects filter into South African companies. He pointed specifically to two channels - a potential drop in foreign demand and any pass-through from higher prices - as key determinants of the eventual impact on domestic activity.
The survey therefore presents a cautiously optimistic operational backdrop for South African firms, with stronger production and hiring offset by a deterioration in export demand and a significant fall in business confidence tied to geopolitical uncertainty.
Methodology note: PMI readings above 50.0 indicate growth, while those below denote contraction. The March release captured activity and sentiment during a period of heightened international tensions that respondents cited as a key concern.