South Africa’s private sector slipped back into contraction in September at its fastest pace since December, as a sharp decline in new orders and mounting supply chain bottlenecks combined with record fuel prices to stifle business activity, according to the latest S&P Global Purchasing Managers’ Index (PMI).
The PMI fell to 49.0 in September from 50.5 in August, dropping below the 50-mark that separates growth from contraction for the first time in three months. The reading represents the weakest performance for South Africa’s private sector so far in 2026 .
NEW ORDERS COLLAPSE AS CONSUMERS RETREAT
The downturn was driven primarily by a severe deterioration in demand. New orders fell at the sharpest rate in two-and-a-half years, with companies reporting that customers were delaying spending amid uncertainty over fuel prices and the broader domestic and international economic outlook.
“The downturn came amid renewed contractions in business activity, new orders and stocks of purchases, as firms often reported a weaker demand environment linked to rising prices and increased economic uncertainty,” said David Owen, Principal Economist at S&P Global Market Intelligence.
Business activity declined for the first time in three months and at the steepest rate since May, as companies cut output in response to weaker demand and input constraints.
One bright spot was export business, which expanded for a fourth consecutive month, bucking the broader trend of domestic weakness .
SUPPLY CHAINS STRAIN UNDER DURBAN CONGESTION
Supply chain pressures intensified significantly during September, with suppliers’ delivery times lengthening to the greatest extent since February 2024 .
Survey respondents pointed to congestion at the Port of Durban, shipping disruptions linked to the Middle East conflict, and material shortages as key factors behind the delays. The South African Association of Freight Forwarders recently warned that operational, equipment, yard and coordination constraints at the Durban terminal had severely disrupted cargo movement, with consequences spreading through the national supply chain .
“Businesses saw a particularly marked lengthening of supplier delivery times in September, with the qualitative aspect of the survey highlighting that increased congestion at the Port of Durban had reintensified domestic supply constraints,” Owen said.
FUEL PRICES DRIVE COST INFLATION
Input cost inflation remained sharp in September, driven mainly by the steep rise in fuel prices . Purchase price inflation climbed to a three-month high, while companies responded by raising selling prices at the fastest pace since June.
The cost pressures come as South African consumers brace for record fuel prices effective Wednesday, with 95-grade petrol set to hit R30.25 per litre in Gauteng.
“September’s downturn was also influenced by a sharp rise in fuel prices across the South African economy. This was the main driver of higher purchase costs, with purchase price inflation ticking up to the highest since June,” Owen said. “There were also indications that customers had subsequently cut spending, while some vendors chose to delay deliveries until they could send items in larger batches. As global oil and fuel markets remain volatile due to the Middle East conflict, elevated prices may continue to dampen activity in the final quarter of the year”.
EMPLOYMENT HOLDS STEADY, BUSINESS CONFIDENCE IMPROVES
Despite the contraction, employment remained broadly stable, with only a marginal decrease in staffing levels. The softer demand environment allowed firms to stay on top of backlogs, reducing pressure on workforce numbers .
Notably, business expectations for the coming year improved for a third consecutive month, reaching their highest level since May. Companies expressed optimism that easing supply difficulties and lower fuel prices would support output growth in the year ahead.