South Africa's private sector business conditions stabilised in January after a challenging end to 2025, as demand steadied and price pressures eased, an S&P Global survey showed on Wednesday.

The Purchasing Managers' Index climbed to a neutral 50 in January, up from 47.7 in December. PMI readings above 50 indicate growth, while those below denote contraction.

Output and new orders stabilised after a sharp drop in December, with companies noting a slight increase in new business volumes. However, the services sector remained sluggish, and total exports continued to fall.

Input buying surged at the fastest rate in four months, though supply chain disruptions resulted in longer delivery times for the first time in ten months.

Inflationary pressures eased, with overall input prices rising at their slowest pace in three months. A stronger rand also helped counteract higher salary costs, resulting in only a modest rise in selling prices.

South Africa's local currency has gained more than 3% against the dollar so far this year.

"Lower inflation, rising tourism and improved energy supply appear to have supported companies in their forecasts for 2026," said David Owen, senior economist at S&P Global Market Intelligence.

Optimism about future demand persisted, buoyed by expectations of better economic conditions and increased tourism, even though confidence dipped to a three-month low.