….drops for third straight time in December
South Africa ended 2025 with the weakest private sector performance among eight major African economies, as business activity slipped to its lowest level in 11 months, according to a BusinessDay analysis of the Purchasing Managers’ Index (PMI) survey released by S&P Global on Tuesday.
The headline PMI fell for a third consecutive month to 47.7 in December from 49.0 in November, signalling a faster deterioration in operating conditions across Africa’s biggest economy. Any reading below the 50-point threshold indicates a contraction in business activity, while above the threshold shows an expansion.
“Business activity decreased sharply over the course of December, with the contraction widespread across monitored sectors and the most marked since last January,” the survey said. Firms cited challenging economic conditions and weaker client demand as key factors behind the decline in output.
New orders also fell for the third straight month, with the downturn the sharpest since March 2024. Survey respondents pointed to reduced household spending, pullbacks in business orders, and softer demand from international clients. Total exports declined in December after a marginal increase in November, underscoring weakening external demand.
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S&P Global and Stanbic Bank surveys track business conditions across about 400 private sector companies by monitoring new orders, output, employment, suppliers’ delivery times, and inventories.
Among the eight African economies tracked, South Africa was the only country to record a PMI below 50. Uganda posted the strongest expansion at 54.0, followed by Kenya at 53.7. Nigeria, Zambia, Mozambique, Egypt, and Ghana recorded readings of 53.5, 51.3, 50.9, 50.,2 and 50.1, respectively.
“After a strong couple of quarters, the South African economy experienced softer conditions in the fourth quarter,” said David Owen, senior economist at S&P Global Market Intelligence. “The downturn was largely driven by a pullback in demand, which intensified in December as customers responded to higher price pressures and broader economic headwinds.”
Owen noted that firms became more cautious with purchasing, recording another decline in December alongside falling inventory levels. Employment conditions, however, were marginally better, with a slight increase attributed mainly to short-term hiring.
South Africa’s annual inflation rate eased to 3.5 percent in November from 3.6 percent in October, slightly below market expectations. In the same month, the South African Reserve Bank cut its key repo rate by 25 basis points to 6.75 percent, its lowest level since September 2022, as inflationary pressures moderated.
The PMI report also showed some easing in cost pressures for South African firms in December, partly supported by an improvement in the rand against the US dollar. Input costs rose at a slower pace than in November, although still faster than levels seen earlier in the year.
Looking ahead to 2026, businesses appeared cautiously optimistic, with firms expecting a recovery in demand and improved operating conditions over the next 12 months.
“Survey respondents expressed confidence that the current downturn will fade, citing hopes of reduced headwinds, stronger customer relationships, and a more supportive demand environment,” Owen said.
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Uganda overtook Kenya in business activity growth in December, reflecting sustained improvements in output and new orders amid stable macroeconomic conditions.
The Uganda Stanbic PMI remained firmly in expansion territory, supported by strong consumer demand and rising business confidence. According to the Uganda Bureau of Statistics, the country’s annual inflation rate stood at 3.1 percent last month, unchanged from November and the lowest since November 2024.
Christopher Legilisho, economist at Stanbic Bank, said Uganda’s private sector performance reflected a resilient domestic economy. “Employment conditions remained healthy, with staffing levels broadly stable after ten months of growth, while rising order volumes led to mounting backlogs,” he said.
Legilisho added that firms expanded purchasing activity and inventories to meet demand pressures, signalling solid momentum in the economy. “Overall, the data suggest that Uganda’s economy continues to perform strongly, a trend expected to be confirmed when official growth figures are released.”