South Africa’s economy contracts in September amid weak demand

South Africa's private sector economy shrank in September for the first time in three months due to weak demand and supply chain issues, according to newly released data. The S&P Global Purchasing Managers' Index fell to 49.0 in September, down from 50.5 in August, indicating a decline in business conditions. Businesses cut activity for the first time in three months at the fastest rate since May.

New orders dropped at the fastest pace in two-and-a-half years, prompting companies to reduce input purchases and increase prices, which rose at the fastest rate since June. Supply chain pressures worsened, with longer delivery times from suppliers and port delays due to container backlogs. The conflict in the Middle East exacerbated shipping delays and material shortages.

Despite these challenges, businesses remained cautious due to uncertainty over domestic and international economic conditions and higher fuel prices. Export markets provided some support, with new export orders rising for the fourth consecutive month at a faster rate than in August. Employment numbers remained steady, and business expectations for the year ahead improved, reaching their highest level in four months.