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This report covers the key data releases domestically and internationally over the past week, as well as updates on crucial structural reform initiatives. It is a shortened version of the more comprehensive BER Weekly (Enhanced version), which includes a detailed discussion on the main economic events and developments over the past week, a summary of upcoming data (the week ahead) and the BER’s forecast for key economic indicators. The BER (Enhanced version) is only available to BER Essential Insights subscribers and BER Premium Insights clients. For more on our products and services please see our product and offering page here.
Last week, Eskom lodged an application with the Gauteng Division of the High Court, seeking to review and set aside NERSA’s approval of five electricity trading licences and one import/export licence. Even if unsuccessful, this court action is likely to delay critical reforms in the electricity sector, particularly the development of a competitive trading market.
Eskom’s main arguments include that these licences were issued without an appropriate regulatory framework, allow traders to “cherry-pick” profitable customers, and undermine Eskom’s ability to recover costs through regulated tariffs.
Business Leadership South Africa and Business Unity South Africa issued a strong statement highlighting concerns that this may derail electricity reform. Critics argue Eskom’s legal move is a backwards step in energy reform, especially since the liberalisation of electricity trading has been a policy goal for decades, and NERSA followed due process, including public participation.
NERSA has responded by confirming that trading rules are still being developed (expected to be finalised in 2026), and it will respond formally once it receives the court documents.
It also highlights concerns about a lack of coordination in government. Eskom, a state-owned entity, appears to be fighting government’s stated policy position. This is not new behaviour from the SOE, which has been a roadblock to energy liberalisation on a number of occasions since the publication of the Energy White Paper in 1998.
The Absa Purchasing Managers’ Index (PMI) recorded its first expansion in nine months, rising by 2.3 points to 50.8 in July. Among the sub-components, new sales orders increased significantly, up 9.7 points to 55.9. This reflected stronger domestic and international demand. The supplier deliveries index also ticked higher, driven by the rise in orders, though some suppliers noted that regulatory issues had become significant supply chain bottlenecks.
Manufacturers remained cautious amid ongoing global uncertainty. While business activity improved by 5.2 points, it remained in contractionary territory, which likely contributed to the decline in the employment index, down 6 points to 43.7. The purchasing price index rose again, pointing to mounting cost pressures.
While current conditions suggest some resilience, the longer-term outlook has softened. The index tracking expected business conditions in six months fell from 62.5 to 56.4.
The S&P Global South Africa PMI, which includes the services sector, also edged higher in July, rising from 50.1 to 50.3 and marking a third consecutive month in expansionary territory. Growth was supported by new sales orders and employment, with respondents reporting an uptick in client activity and a mix of both permanent and temporary hires. The demand increase was driven primarily by domestic sales, with exports falling for the fourth straight month.
Output remained broadly unchanged, but firms noted stabilising supply chains. This was reflected in higher purchasing, lower inventories and reduced backlogs. Input costs accelerated to a three-month high, but firms remained cautious about passing these costs on to consumers. Notably, business expectations over the next 12 months improved, recovering from a near four-year low in June.
In accordance with expectations, the Bank of England (BoE) MPC cut its benchmark rate by 25 bps to 4%. This decision comes despite the persistence of inflation. Services inflation is currently at 4.7%, while wage growth is still above 3%, which is the rate consistent with the BoE’s 2% target. The BoE is also worried about higher food prices that could drive inflation further above the target in the near term. On the other hand, the softening labour market has become a growing concern for some MPC members, contributing to the narrow 5-4 vote split. The rate cut reflects a balancing act between curbing inflation and supporting a cooling economy.
Meanwhile, the UK S&P Global Services PMI declined to 51.8 in July from 52.8 in June, primarily reflecting weaker domestic demand. On the manufacturing front, the PMI rose to 48.0, still in contractionary terrain but slightly better than June’s reading of 47.0. This improvement is considered tentative, reflecting the broader global weakness in external demand.
The HCOB Eurozone composite PMI increased to 50.9 in July from 50.6 in June. This marks the seventh consecutive month of expansion and a four-month high, though it remains below its long-run average. Export demand remained weak, extending a 41-month decline, while business sentiment deteriorated in both the services and manufacturing sectors. A positive development came in the form of job creation, which accelerated to its fastest pace in over a year, albeit modestly.
Retail sales in the Eurozone expanded by 0.3% m-o-m in June versus a 0.3% contraction in May. On an annual basis, retail sales increased by 3.1% y-o-y in June.
China’s services sector regained momentum in July, with the Caixin China General Services PMI rising to 52.6, up from June’s nine-month low of 50.6 and ahead of market expectations of 50.4. This marks the strongest expansion since May 2024. The improvement was supported by a rebound in external demand amid more stable trade conditions and an uptick in tourism-related activity.
By contrast, the S&P Composite PMI for China moderated to 50.8, still in expansionary terrain but easing from June’s three-month high. The divergence between services and manufacturing sectors remained stark. While services drove overall growth, the manufacturing PMI slipped back into contraction on the back of softer external demand and weaker export sales.
The ISM US Services PMI declined marginally to 50.1 in July from 50.8 the month before. The index has been above the 50-point breakeven mark for 12 out of the last 13 months. Business activity has held firm and has not contracted since May 2020, while new orders have remained resilient.
The S&P Global US Services PMI gained momentum in July, supported by stronger business activity amid a pick-up in new orders. However, the rebound was largely domestically driven, with export orders declining.
Editor: Tracey-Lee Solomon
Tel: +27 (0)21 808 9755
Email: tsolomon@sun.ac.za
Click here for previous editions of this publication.
Please refer to the glossary on the BER website for explanations of technical terms.
Friday, 08 Aug 2025
