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Activity in South Africa's private sector inched upwards in June, with Standard Bank's Purchasing Managers Index (PMI) reflecting a modest increase to 50.9 from 50.0 in May.
The latest data, released by Standard Bank and IHS Markit on Wednesday, indicates that business conditions improved, with output increasing during the second quarter of the year.
New business and employment rose at an accelerated rate.
Uptick
The index reflects an uptick in the health of South Africa’s private sector. Business conditions strengthened at the fastest rate for three months, but the pace remains modest, the report read.
Thanda Sithole, an economist at Standard Bank, said the PMI was in line with expectations and that domestic business conditions would improve. This will be supported by domestic consumption expenditure, as well as reasonable global growth.
"Nevertheless, we acknowledge and will monitor the risks associated with elevated international oil prices, a continued domestic currency weakness, the ongoing debate on land expropriation alongside the continued global trade concerns," said Sithole.
Standard Bank expects GDP growth of 1.7% for 2018 and 2.2% for 2019.
According to the report, the higher June PMI was driven by the new orders index, as a result of new business in the private sector.
The index increased from 50.6 to 51.3. New projects had also driven expansion in orders, though the rate of order book growth was modest.
The output index grew to 50.9, having been below the 50 mark for two consecutive months.
The employment index, meanwhile, rose to 51.3 from 50.2.
The stock of purchases index fell below the 50-mark and weighed down the overall PMI, Sithole said.
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