South Africa: Business conditions worsen for the sixth consecutive month in October
November 5, 2019
Business conditions in South Africa’s private sector worsened for the sixth month running in October, although the rate of contraction in activity eased slightly from the previous month. The IHS Markit Purchasing Managers’ Index (PMI) edged up to 49.4 from 49.2 in September, thus moving slightly closer to the critical 50-threshold.
Overall output fell in October amid downbeat demand, shortage of inputs and the return of load-shedding, although the rate of decline softened slightly from September. New business, however, declined at a faster rate, reflecting the fastest drop in new export orders in five months. Despite the drop in output, there was a need for firms to hire more workers and the rate of employment shot up to the highest in one-and-a-half years. Meanwhile, on the price front, input prices rose more rapidly, largely owing to a hike in wages. The increased cost burden prompted firms to raise output prices slightly. On the outlook, firms were the most upbeat since June on expectations of improved domestic and foreign demand.
Author: Nihad Ahmed, Economist