South Africa’s private sector returned to contraction in May after four consecutive months of growth, as rising fuel costs and uncertainty linked to tensions in the Middle East weakened business activity across the economy.
According to Reuters, the latest S&P Global Purchasing Managers’ Index showed a decline in both output and new orders, signaling renewed pressure on businesses.
The S&P Global South Africa Purchasing Managers’ Index fell to 49.6 in May from 51.6 in April. A reading below 50 indicates contraction, while a figure above that level signals expansion.
Reuters reported that businesses experienced weaker demand and reduced production as higher fuel prices increased operating costs and affected consumer and business spending.
The results come as South Africa continues navigating a challenging economic environment under President Cyril Ramaphosa, with policymakers balancing inflation pressures, growth objectives, and external economic risks.
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Andrew Harker, Economics Director at S&P Global Market Intelligence, said the conflict in the Middle East and the resulting increase in fuel prices had a noticeable impact on private sector activity during May.
Reuters reported that business output declined for the first time in five months, with companies citing higher fuel costs, geopolitical uncertainty, and severe weather conditions as key factors affecting performance.
New orders also fell for the third time in four months and at the fastest pace recorded so far this year.
Survey respondents reported weaker international demand, with higher prices linked to the Middle East conflict contributing to reduced orders from customers across Europe and Africa.
Despite the softer business conditions, companies remained optimistic about future prospects. Reuters noted that business confidence reached its highest level of 2026 so far, supported by expectations of new work opportunities, marketing initiatives, and hopes that operating conditions could become more stable over the coming months.
What This Means For Africa
South Africa’s latest PMI figures demonstrate how global geopolitical developments can quickly affect business activity across African economies.
Many African countries remain highly exposed to fluctuations in fuel prices because transportation, logistics, manufacturing, agriculture, and consumer markets depend heavily on imported energy products. When energy costs rise sharply, businesses often face higher operating expenses that can reduce demand and profitability.
The decline in new orders also highlights how international uncertainty can influence trade relationships. Slower demand from customers in Africa, Europe, and other markets can directly affect export oriented businesses and broader economic activity.
At the same time, South Africa’s PMI remains an important indicator for the continent because the country has one of Africa’s largest and most diversified private sectors. Trends affecting South African businesses often provide insight into broader economic conditions across regional markets.
The continued optimism among companies is particularly notable. While current trading conditions weakened during May, firms appear confident that future opportunities, improved stability, and stronger demand could support recovery later in the year.
The survey also reinforces the importance of economic resilience strategies across Africa. Reducing exposure to external energy shocks, strengthening domestic production capacity, improving logistics infrastructure, and expanding regional trade can help economies better withstand global disruptions.
As geopolitical tensions continue influencing commodity markets and inflation pressures, African businesses will likely remain focused on managing costs while positioning themselves for growth opportunities when market conditions improve.
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