South African households and businesses are feeling the squeeze as the country’s private sector shrank in September at its quickest pace since December, according to a business survey released on Monday. The forces behind the slowdown, notably rising fuel costs and stretched supply chains, feed directly into the prices people pay and the reliability of goods reaching shelves.
The S&P Global South Africa Purchasing Managers’ Index slipped to 49.0 in September from 50.5 in August, dipping below the 50-mark that separates growth from contraction. David Owen, Principal Economist at S&P Global Market Intelligence, said the downturn came amid renewed contractions in business activity, new orders and stocks of purchases, as firms often reported a weaker demand environment linked to rising prices and increased economic uncertainty.
Demand weakened markedly. New orders fell at the sharpest rate in two-and-a-half years, with clients holding back spending amid uncertainty over fuel prices and domestic and international economic conditions. That hesitancy reflects a broader caution about household and business budgets in an unpredictable environment. Export business stood out as an exception, rising for a fourth straight month.
Meanwhile, the strain extended to the movement of goods. Suppliers’ delivery times lengthened to the greatest extent since February 2024, and respondents pointed to congestion at the Port of Durban, shipping disruption and material shortages. Ports and freight networks underpin everyday commerce, so these bottlenecks carry consequences well beyond the firms surveyed, affecting how quickly and cheaply products reach the market.
Costs kept climbing. Input cost inflation remained sharp, driven mainly by higher fuel prices, while purchase price inflation climbed to a three-month high. Companies passed on some of that pressure by raising selling prices at the fastest pace since June, a development with a direct bearing on consumers’ cost of living. Employment, by contrast, was little changed, with only a slight reduction in workforces.
There was a note of optimism in the data. Business expectations improved for a third month and reached their highest level since May, as firms hoped that easing supply problems and lower fuel prices would support output growth over the coming year. For the broader public, that outlook hinges on whether the pressures now squeezing prices and deliveries genuinely recede, restoring conditions under which businesses can serve customers more reliably and affordably.