South Africa: Business conditions deteriorate for fifth consecutive month in September
October 3, 2019
Business conditions in South Africa’s private sector deteriorated for the fifth consecutive month, with the IHS Markit Purchasing Managers’ Index (PMI) sliding to 49.2 in September from 49.7 in August. Thus, the index moved further below the critical 50-threshold, signaling a more marked rate of contraction in private-sector activity in September than the previous month.
Output and new orders fell more rapidly in September as overall demand shrank for the fifteenth month running amid the persistence of challenging economic conditions. Moreover, reports indicated that the activity of some firms was hampered by the emergence of social unrest in the month as thousands took to the streets to protest against gender violence. As a result of the fall in production, firms hired less workers. Meanwhile, on the price front, overall input costs rose more softly, reflecting a fall in staff costs. In a bid to revive sales, firms cut their output prices marginally in September. Lastly, the outlook on future activity remained muted. While sentiment was overall positive, uncertainty over the economy’s prospects weighed on the projection.
Author: Nihad Ahmed, Economist