South Africa’s Private Sector Edges Back Into Growth

South Africa’s private sector showed tentative signs of recovery in March 2026, as the S&P Global Purchasing Managers’ Index (PMI) climbed to 50.8, up from a flat 50.0 in February, signalling a return to marginal expansion after months of stagnation.

Output saw its fastest rise in six months, led by stock rebuilding and new projects, while employment growth hit its highest pace since mid‑2024, a welcome shift after prolonged demand weakness.

Despite these gains, new orders continued to decline and export sales contracted at the steepest pace in over two years, underlining persistent weakness in foreign demand. Analysts say global uncertainty particularly due to the lingering U.S.‑Israeli war with Iran has dampened business confidence worldwide, contributing to subdued international orders and hesitance among local firms to scale up output.

Business sentiment in South Africa remains fragile: confidence dropped to its lowest level since July 2021. Only about 32% of firms surveyed expect output to rise over the next 12 months, pointing to cautious expectations against a backdrop of volatile commodity prices and fluctuating demand.

The economic backdrop is further complicated by cost pressures. Firms face higher input costs, notably for fuel and logistics, as global energy market disruptions filter through local supply chains. South Africa’s manufacturing sector also expressed concerns about the war’s impact on supply reliability and pricing, a theme echoed in broader geopolitical risk assessments across industries.

Economists caution that while the slight uptick in activity is encouraging, the recovery remains highly vulnerable to external shocks. Continued conflict in the Middle East, weak global demand and elevated inflation risks could undercut investment and slow the pace of expansion. South Africa’s policymakers are now under pressure to maintain growth without triggering inflationary blowbacks.