South Africa: PMI points to a further contraction in the private sector in September
October 5, 2017
Activity in the private sector dipped further into contractionary territory in September. The Standard Bank Purchasing Managers’ Index (PMI) dropped from 49.8 in August to an almost two-year low of 48.5 in September, moving further from the six-year long-run survey average of 50.7. A reading below 50 signals deteriorating domestic business operating conditions.
September’s print marks a decline in output, new orders and employment. Private sector output dropped for the sixth consecutive month, logging its worst print in 17 months. The contraction in production reflects a fall in new orders amid weak demand. New orders went down for the third time in the past four months, and at the sharpest rate since April 2016. As output and new orders declined, firms reduced overall staffing levels at the fastest rate since April 2016. Regarding price developments, input costs and output prices rose sharply in September as firms passed on the burden of adjustment to consumers through higher prices.
