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IOL News
a day ago
- Business
- IOL News
Economic downturn signs emerge as South Africa's PMI drops to 50. 1
Citrus and fruit, vines, nuts, avocados, and beef, are among South Africa's main agricultural exports. S&P Global said new business volumes experienced their first decline since March, which can be attributed, at least in part, to a continued downturn in export orders, suffering a third consecutive monthly contraction. Image: Doctor Ngcobo / Independent Newspapers South Africa's private sector economy has signalled a concerning shift towards fragility, as evidenced by the latest S&P Global Purchasing Managers' Index (PMI). The PMI, which serves as a composite indicator of operating conditions in the private sector, revealed a notable decline on Thursday, dropping from 50.8 in May to 50.1 in June. This reading, while remaining barely within the expansion territory, raises red flags as business confidence plummeted to its lowest point in nearly four years. The PMI serves as a crucial economic barometer; readings above 50 indicate an improvement in business conditions compared to the prior month, while readings below this threshold reflect deterioration. This S&P economic indicator corresponds with the Absa PMI released on Tuesday, which showed that the economy remained in contractionary territory for the eighth consecutive month, despite the index rising by 5.4 points to reach 48.5 in June from 43.1 in May. With the June figure hovering just above the critical 50.0 mark in the S&P PMI, early signs of a potential economic downturn are evident. The PMI's underlying components painted a mixed picture: a decline in output and new business volumes contrasted with increases in stock levels and workforce size. In June, output levels across the private sector declined for the first time in three months, signalling a significant setback from the previous month when growth surged to a four-year high. Although this reduction was marginal, it marked the first contraction in activity since March, with weakness spanning nearly all sectors, except for services. Furthermore, new business volumes experienced their first decline since March, which can be attributed, at least in part, to a continued downturn in export orders, suffering a third consecutive monthly contraction. Amid these troubling economic signs, South African firms have displayed waning confidence in the outlook for business activity. The level of optimism dropped sharply, reaching its lowest point in close to four years. A noticeable decline in the proportion of firms expecting output growth from May significantly contributed to this drop. Factors such as ongoing domestic and foreign policy uncertainties have undermined optimism, despite positive influences from project starts and efforts to reach new clientele. David Owen, senior Economist at S&P Global Market Intelligence, said the drop in business expectations to their lowest since July 2021 showed that firms were growing increasingly nervous about the domestic and non-domestic economic outlook. "Nevertheless, the survey data suggests that companies were still willing to expand their headcounts and store more inputs, helped by a relatively benign (albeit quickening) cost environment." "And whilst the headline PMI dropped to 50.1 in June, eroding much of the growth in private sector conditions seen during May's six-month high, this was still a higher reading than those recorded in the first quarter, adding to estimates of a solid up turn in Q2 GDP." On a brighter note, employment data from the PMI revealed a modest increase in workforce numbers for the second time in three months. This rise, the most pronounced since May 2024, was chiefly driven by growth in the service sector. Additionally, the supply chain environment showed improvement, marking the longest stretch of enhanced supplier conditions in nearly nine years. This uptick is attributed to reductions in port disruptions and lower input demands, although the decrease in lead times remains minimal. Despite these positive developments, June saw intensified cost pressures across the South African economy, with input prices climbing at a solid pace. All sectors reported increases in costs, although it was the wholesale and retail sectors that experienced the most severe inflation rates. This increase in expenses can be linked to rising purchase prices and staffing costs, the latter of which experienced notably higher-than-average growth. Interestingly, though cost pressures mounted, the increase in selling prices remained modest, as businesses sought to balance the need to pass on costs with the realities of heightened competition. Encouragingly, reports indicated that a stronger rand allowed some firms to reduce their prices. BUSINESS REPORT
Yahoo
04-06-2025
- Business
- Yahoo
Markets Slide to Flat on Jobs, Trade, Beige Book, Earnings
Wednesday, June 4, 2025Market activity this Hump Day was a little of this, a little of that. Pre-markets were lower on a weaker-than-expected private-sector payrolls report from ADP ADP, but most major market indexes spent most of the session in the green. This took a downward turn this afternoon, perhaps somewhat on a cooler Beige Book, but likely more a lack of enthusiasm to propel markets higher amid continuing trade is, after all, the self-imposed deadline for major deals to be announced with U.S. trading partners. Perhaps they're all waiting until this evening to spring the news, but currently there aren't any new trade deals. The Dow closed -0.18% while the S&P 500 was +0.01%. The Nasdaq, still kept somewhat aloft by the continuing AI trade, was +0.32%, and the small-cap Russell 2000 slipped -0.08%. The fourth of eight Beige Books this year from the Federal Reserve was released this afternoon for the month of May. Overall, it demonstrated a slight decline from the April 23rd report, with half of the 12 cities (regions) posting slightly negative economic growth: Boston, New York, Philadelphia, Minneapolis, Kansas City and San three cities that saw slight increases in economic activity were Richmond, VA, Atlanta and Chicago. Those flat cities from the prior report included Cleveland, St Louis and Dallas. All 12 districts saw an increase in economic and policy uncertainty, and showed manufacturing slowing as a result. Consumer spending throughout the regions were mixed, generally along economic growth lines. Earlier today, we saw the final print for both S&P Services PMI and ISM Services, both for May. S&P PMI came in higher than the flash headline — +53.7 versus +52.3 — and up strongly from the previous month's +50.8%. ISM Services dipped just below the 50% threshold to +49.9%, off the +52.1% flash number and the +51.6% reported the S&P PMI saw a stable business environment domestically (tempered somewhat by two-straight down months on foreign demand), ISM showed orders and inventories shrinking while prices continuing to rise — now at their highest levels since November 2022. The last sub-50% print on ISM Services was back in June of last year; S&P hasn't been sub-50 since January of '23. Youth-oriented discount retailer Five Below FIVE outperformed Q1 estimates on both top and bottom lines after today's close, with earnings of 86 cents per share surpassing the 83 cents in the Zacks consensus on $970.5 million in revenues. This improved over the $967.6 million analysts had been expecting. Comps were good at +7.1%, and Q2 comps guidance is set between +5-7%.The company has raised the lower end of their earnings guidance for the full year, but is still a few cents beneath our consensus. Also, Five Below announced that its COO will be stepping down for personal reasons, to be replaced by the current CFO, who used to have that job previously. Shares initially dipped on the news but at now back up +1.7% in late-day trading. As we see most Thursdays, Jobless Claims will hit the tape ahead of the opening bell tomorrow. These jobs numbers, finely parsed as they are into weekly sets, follow Tuesday's unexpected rise in JOLTS job openings for April to 7.4 million and this morning's lower-than-expected private-sector payrolls from ADP ADP. (Friday morning brings us the big Employment Situation report from the U.S. government.)Also tomorrow, we expect to see an update on the April U.S. trade deficit, expected to improve greatly to -$63.3 billion from -$140.5 billion in the prior month. Also, Q1 Productivity is expected to remain steady at -0.8% ahead of Thursday's opening bell. There will also be mid-day speeches given by Fed Governor Kugler and Philly Fed President Harker or comments about this article and/or author? Click here>> Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Automatic Data Processing, Inc. (ADP) : Free Stock Analysis Report Five Below, Inc. (FIVE) : Free Stock Analysis Report This article originally published on Zacks Investment Research ( Zacks Investment Research Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
