JOHANNESBURG, Jan 6 (Reuters) - South Africa's business activity contracted sharply in December, marking the weakest performance since last January as demand waned and firms reduced purchases and inventories,
an S&P Global survey showed on Tuesday.
The Purchasing Managers' Index (PMI) fell to 47.7 in December from 49.0 in November, remaining below the 50.0 mark that separates growth from contraction. December's reading means the index was in contraction territory throughout the final quarter of 2025.
The downturn last month was driven by a sharp decrease in output and new orders, with firms citing challenging economic conditions and weaker client demand.
New work intakes fell for the third consecutive month, the steepest decline since March 2024, as household spending and business orders pulled back, and export sales dropped after a marginal rise in November.
Despite the challenging environment, employment edged higher for the third month in a row, although only fractionally.
Businesses remained optimistic about a recovery in 2026, with hopes pinned on improving economic conditions and new projects.
Input price inflation eased slightly due to a stronger exchange rate with the U.S. dollar, although costs for inputs such as fuel and vehicles rose.
South Africa's rand ended 2025 nearly 13% stronger against the U.S. dollar, marking its biggest annual gain in 16 years as the greenback weakened broadly.
(Reporting by Johannesburg bureau; Editing by Hugh Lawson)
