South African business activity expanded at its fastest pace in four years in May, fueled by a strong increase in private sector output and renewed customer confidence, according to the S&P Global South Africa Purchasing Managers’ Index (PMI). The PMI climbed to 50.8 from 50.0 in April, marking the first growth since November 2024. A reading above 50 indicates expansion, while below 50 signals contraction.

The survey highlighted a marginal improvement in the private sector, with companies reporting growth in output, new orders, and inventories. The output subindex soared to its highest level since May 2021, as businesses capitalized on new projects and a surge in domestic orders to recover from a sluggish first quarter. David Owen, senior economist at S&P Global Market Intelligence, noted, "The May PMI results point to a strong second-quarter performance across the private sector. Businesses are regaining sales momentum, supporting increased activity and purchasing."

Improved supply chain conditions, including shorter delivery times, allowed firms to bolster inventories at the fastest rate in a year. Input price inflation eased, enabling companies to lower selling prices for the second time in three months, further boosting demand. However, export orders continued to decline, though at a slower pace than in April, partly due to U.S. tariffs impacting foreign trade, according to Reuters.

Despite the upbeat domestic outlook, staffing levels saw a slight reduction as firms cited restructuring and unfilled vacancies. Nevertheless, business optimism reached a three-month high, driven by expectations of growing client demand and new product launches. This positive sentiment aligns with reports from BusinessTech, which noted that South Africa’s economic recovery is gaining traction, supported by improved power supply and policy reforms.

The PMI data suggests South Africa’s private sector is on a path to recovery, offering hope for sustained economic growth in 2025, provided global trade challenges do not intensify.